Question 1

Annuities can be done manually or by computer.

Accepted Answer

A) True 
 B)False  True

Question 2

How much will the Van Company have to set aside each period to have $60,000 twelve years from now? Assume money is at 12% compounded semiannually.

Accepted Answer

$1,182

Question 3

Match the following terms with their definitions.
-Ordinary annuities

Accepted Answer

A)  Paid at end
B)  Beginning as well as ending dates
C)  Paid at beginning
D)  Need to invest today to receive the stream
E)  Set aside payments to build to future amountF) Beginning as well as ending dates, not fixedG) Sum of series of paymentsH) Stream of payments A

Question 4

Block Associates borrowed $75,000. The company plans to set up a sinking fund that will repay the loan after 16 years. Assume an 8% interest rate compounded semiannually. What must Block Associates pay into the fund each period?

Accepted Answer

The answer of Block Associates borrowed $75,000. The company plans...

Question 5

Use the tables in the handbook. Bob Fraser promised to pay his son $400 semiannually for six years. If Bob can invest his money at 12% in an ordinary annuity, how much must he invest today to be able to pay his son $400 semiannually for six years?

Accepted Answer

The answer of Use the tables in the handbook. Bob...

Question 6

Roger Fox made deposits of $900 semiannually to Reed Bank at the end of each period, which pays 6% interest compounded semiannually. After seven years Roger made no more deposits. What will be the balance in the account eight years after the last deposit?

Accepted Answer

The answer of Roger Fox made deposits of $900 semiannually...

Question 7

Sinking funds accumulate money in the present to accumulate a specific sum at a predetermined present date.

Accepted Answer

A) True 
 B)False

Question 8

Alice Kate puts $2,500 in a bank at the end of every six months. The bank pays 12% compounded semiannually. Assuming Alice does this for four years, what is the total interest she will receive?

Accepted Answer

The answer of Alice Kate puts $2,500 in a bank...

Question 9

Match the following terms with their definitions.
-Annuity due

Accepted Answer

A)  Paid at end
B)  Beginning as well as ending dates
C)  Paid at beginning
D)  Need to invest today to receive the stream
E)  Set aside payments to build to future amountF) Beginning as well as ending dates, not fixedG) Sum of series of paymentsH) Stream of payments

Question 10

Use the tables in the handbook. Pam Reed has decided to invest $500 quarterly for five years in an ordinary annuity at 12%. As her financial advisor, calculate for Pam the total cash value of the annuity at the end of year 5.

Accepted Answer

The answer of Use the tables in the handbook. Pam...

Question 11

What must John Sullivan invest today to receive an annuity of $6,000 for three years semiannually at a 10% annual rate? All withdrawals will be made at the end of each period.

Accepted Answer

The answer of What must John Sullivan invest today to...

Question 12

Jorgen Grace made deposits of $250 at the end of each year for 12 years. The rate received was 6% annually. What is the value of the investment after 12 years?

Accepted Answer

A)  $2,028
B)  $3,000
C)  $4,217.48
D)  $4,200
E)  None of these

Question 13

Find the value of an investment after five years for a $6,000 ordinary annuity at 8% compounded annually.

Accepted Answer

The answer of Find the value of an investment after...

Question 14

Doubletree Capital Investments deposits $700 semiannually for 6 years into an account that pays 6% interest. What is the balance after the last deposit?

Accepted Answer

The answer of Doubletree Capital Investments deposits $700 semiannually for...

Question 15

Robin wants to receive $2,500 at the end of each year for the next 10 years. How much should she deposit today at 5% annually?

Accepted Answer

The answer of Robin wants to receive $2,500 at the...

Question 16

An annuity due provides a lower final value compared with an ordinary annuity.

Accepted Answer

A) True 
 B)False

Question 17

Lee Associates borrowed $60,000. The company plans to set up a sinking fund that will pay back the loan at the end of 12 years. Assuming a rate of 8% compounded semiannually, the amount to be paid into the fund each period is (use the tables in the handbook):

Accepted Answer

A)  $1,350
B)  $1,536
C)  $1,653
D)  $5,163
E)  None of these

Question 18

What must Bill McGuire invest today to receive an annuity of $12,000 for four years semiannually at a 10% annual rate? All withdrawals will be made at the end of each period.

Accepted Answer

The answer of What must Bill McGuire invest today to...

Question 19

Find the value of an investment after four years on $6,000 made quarterly at 8% for (A)an ordinary annuity and (B)an annuity due.

Accepted Answer