Question 1

How much extra interest do you gain by starting today rather than waiting one year if you want to deposit $1710 per year for 28 years? You are able to earn 7.07% compounded annually.

Accepted Answer

A) $9689.63 
B) $9896.63 
C) $9869.63 
D) $9889.63 
E) $9999.63

Question 2

Determine the future value and the present value of monthly payments of $173.00 each for six years at 6.48% compounded monthly if
a)the payments form an annuity due;
b)the payments form an ordinary annuity.

Accepted Answer

The answer of Determine the future value and the present...

Question 3

Calculate the amount of money that needs to be invested today at 4.8% compounded semi-annually to provide monthly payments of $500.00 in perpetuity starting:
a)one month from today
b)one year from today

Accepted Answer

The answer of Calculate the amount of money that needs...

Question 4

How much does a depositor have to save at the beginning of every three months for 13.25 years to accumulate $41 600.00 if interest is 8% compounded quarterly?

Accepted Answer

The answer of How much does a depositor have to...

Question 5

Sundeep wants to withdraw $1000.00 at the beginning of each quarter for twelve years. If the withdrawals are deferred to begin ten years from now and interest is 4.5% compounded monthly calculate the amount that must be invested today to be able to make the withdrawals.

Accepted Answer

The answer of Sundeep wants to withdraw $1000.00 at the...

Question 6

Siri plans to retire when her simple annuity savings account has enough money to receive $10 000.00 per month for twenty years starting at the start of the first month after her retirement. She starts saving $4420 per month. Calculate when should Siri retire from today if her savings account pays 4.9% compounded quarterly.

Accepted Answer

A) 18 years 
B) 216 years 
C) 18 years 6 months 
D) 1.41 years 
E) 36 years

Question 7

Jawad makes semi-annual contributions of $2000 starting on his 27th birthday. How much will he accumulate in his RRSP by age 60, if RRSP earns 8% compounded annually and no contribution is made on his sixtieth birthday?

Accepted Answer

A) $615 535 
B) $640 156 
C) $565 324 
D) $595 254 
E) $618 606

Question 8

The sale of property provides for payments of $10 000.00 due at the beginning of every three months for ten years. If the payments are deferred for five years and interest is 12% compounded monthly, what is the cash value of the property?

Accepted Answer

The answer of The sale of property provides for payments...

Question 9

A trust fund will start to pay you $15 200 per year at the beginning of each year once you turn 18. The prevailing interest rate is 8.79% compounded annually. For how long can you receive payments if you are celebrating your 14th birthday today and the current value of your trust fund is $111 345?

Accepted Answer

A) 20.97 years 
B) 29.07 years 
C) 20.07 years 
D) 29.77 years 
E) 24.97 years

Question 10

Payments on a six-year lease valued at $12 975.00 are to be made at the beginning of each month during the last 3 years of the lease. If interest is 9% compounded monthly, what is the size of the monthly payments?

Accepted Answer

The answer of Payments on a six-year lease valued at...

Question 11

Equal payments are to be made at the end of each month for 12 years with interest at 9.66% compounded monthly. After the last payment, the fund is to be invested for 4 years at 6.82% compounded quarterly and have a maturity value of $27 600.00. What is the size of the monthly payment?

Accepted Answer

The answer of Equal payments are to be made at...

Question 12

A property was purchased for quarterly payments of $1070.00 for 9 years. If the first payment was made on the date of purchase and interest is 5.57% compounded annually, what was the purchase price of the property?

Accepted Answer

The answer of A property was purchased for quarterly payments...

Question 13

After retirement, Andy plans to buy bonds in a perpetual fund. What amount must Andy place in a perpetual fund today, if it earns 4.8% compounded semi-annually and the first monthly payment of $500 in perpetuity will be made one year from today?

Accepted Answer

A) $126 244 
B) $120 873 
C) $120 396 
D) $119 629 
E) $125 000

Question 14

Whitby Honda advertised Honda Pilot for sale at $33 610. The same vehicle could also be leased for 5 years at $379 per month, based on $4310 down payment and a residual value of $10 711. What monthly compounded interest rate was built into the lease?

Accepted Answer

A) 4.05% 
B) 4.13% 
C) 0.38% 
D) 7.45% 
E) 0.9%

Question 15

Kelly is saving $1600.00 at the beginning of each month. How soon can he retire if he wants to have a retirement fund of $345 000.00 and interest is 11.04% compounded monthly?

Accepted Answer

The answer of Kelly is saving $1600.00 at the beginning...

Question 16

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?

Accepted Answer

The answer of A sum of money is deposited at...

Question 17

Mrs. Lavergne deposits $562.71 at the beginning of every three months. Starting three months after the last deposit, she intends to withdraw $587.00 every three months for 16 years. If interest is 8.14% compounded quarterly, for how long must Mrs. Lavergne make deposits?

Accepted Answer

The answer of Mrs. Lavergne deposits $562.71 at the beginning...

Question 18

A lease requires monthly payments of $1150.00 due in advance. If interest is 16% compounded quarterly and the term of the lease is 4 years, what is the cash value of the lease?

Accepted Answer

The answer of A lease requires monthly payments of $1150.00...

Question 19

Sue won a "Millionaire Life" lottery. As a winner of the Grand Prize, she can choose either $1 million per year for 25 years or a single cash payment of $17 million. What option should be chosen if the payments are made at the beginning of each year and on low risk investments, money can earn 3.2% compounded annually?

Accepted Answer

The answer of Sue won a "Millionaire Life" lottery. As...

Question 20

Sam got a job at the Brick. He plans to save $500 every month for 3 years to buy a car. The savings account earns 2.25% compounded monthly. If he puts the money in his savings account at the beginning of each month, what will be the present value of the balance in the account at the end of the three-year term?

Accepted Answer

A) $17 390.19 
B) $18 408.04 
C) $18 603.37 
D) $18 638.25 
E) $17 422.79

Exam 13: Annuities Due, Deferred Annuities, and Perpetuities