Exam 13: Annuities Due, deferred Annuities, and Perpetuities

Determine the accumulated value after 15 years of deposits of $9000.00 made at the beginning of every three months and earning interest at 8% compounded quarterly.

You start to save for a major purchase.You can invest $500 every three months for 10 years.You are able to earn 8% compounded semi-annually.What is the amount of interest that you earn during the entire term?

Sandra intends to retire in 15 years and would like to receive $3000.00 every six months for 19 years starting on the date of her retirement.How much must Sandra deposit in an account today if interest is 8% compounded semi-annually?

Note: The calculations for this question were done using Excel's RATE function. At what nominal rate of interest compounded semi-annually will $2200.00 deposited at the beginning of every six months accumulate to $68 000.00 in 11 years?

Joshua deposited $3560.00 at the beginning of every 6 months for 11 years into a fund paying 3.5% compounded semi-annually.Fourteen years after the first deposit he converted the then existing balance into an annuity due paying him equal annual payments for 22 years.If interest for the annuity due is 5% compounded annually,what is the size of the annual payment?

Robert Bernard deposited $1000.00 in a trust account on the day of his son's birth and every three months thereafter.If interest paid is 8% compounded quarterly,what will the balance in the trust account be before the deposit is made on the son's twenty-first birthday?

Heavy Mechanical Complex (HMC)acquired a giant lathe machine under a capital lease agreement.HMC pays the lessor $2400 at the beginning of every 3 months for 5 years.If HMC can obtain 5-year financing at 10% compounding quarterly,what liability will be reported 2 years later?

Mrs.Martin contributes $1830.00 at the beginning of every three months to an RRSP.Interest on the account is 7.44% compounded quarterly. a)What will the balance in the account be after 6 years? b)How much of the balance will be interest? c)If Mrs.Martin converts the balance after 6 years into an RRIF paying 5.41% compounded quarterly and makes equal quarterly withdrawals for 11 years starting three months after the conversion into the RRIF,what is the size of the quarterly withdrawal? d)What is the combined interest earned by the RRSP and the RRIF?

You bought a camper priced at $15 660.00 on February 1.You agreed to make monthly payments of $575.00 beginning December 1 of the same year.For how long will you have to make these payments if interest is 8.5% compounded monthly?

What is the discounted value of deposits of $250.00 made at the beginning of every three months for 10.5 years if money is worth 6% compounded quarterly?

Mrs.Muirhead paid $27 700.00 into a retirement fund paying interest at 9.32% compounded semi-annually.If she retires in 13.5 years,for how long can Mrs.Muirhead withdraw $5000.00 from the fund every six months? Assume that the first withdrawal is on the date of retirement.

Sean Paul makes deposits of $500.00 at the beginning of every three months.Interest earned by the deposits is 8% compounded quarterly. a)What will the balance in Sean's account be after ten years? b)How much of the balance will Sean have contributed? c)How much of the balance is interest?

An investment in a lease offers returns of $3713 per month due at the beginning of each month for 4.5 years.What investment is justified if the returns are deferred for two years and the interest required is 6.12% compounded monthly?

A sum of money is deposited at the end of every month for 9 years at 8.5% compounded monthly.After the last deposit,interest for the account is to be 8.1% compounded quarterly and the account is to be paid out by end-of-quarter quarterly payments of $1800.00 over 7 years.What is the size of the monthly deposit?

Determine the accumulated value after 13.5 years of deposits of $470.00 made at the beginning of every three months and earning interest at 7.2% compounded quarterly.

Slick Sean contributes $500.00 at the beginning of each month into RRSP paying interest at 6.00% compounded semi-annually.What will be the accumulated balance in the RRSP at the end of 15 years?

The sale of property provides for payments of $4500.00 due at the beginning of every three months for five years.If the payments are deferred for two years and interest is 6% compounded monthly,what is the cash value of the property?

How much does a depositor have to save at the beginning of every 6 months for twenty years to accumulate $1 000 000.00 if interest is 6.00% compounded semi-annually?

What sum of money must be deposited in a trust fund to provide a scholarship of $1520.00,payable at the beginning of each 3 months,if interest is 6.72% compounded quarterly?

When Nancy died,she left $20 000 for her 13 year old grandson,Max,to be paid to him as an annual scholarship of $8000 at the beginning of each year,if he ends up in the university.The inheritance was invested in a scholarship fund for 5 years at 9% compounded annually.How long will the scholarship be paid,once Max enters the university?