Question 1

Howardson Electric obtained a $90,000 loan at 9.75% compounded monthly. What size of semi-annual payments will repay the loan in 10 years?

Accepted Answer

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Question 2

Rashid wants to use $500,000 from his RRSP to purchase an annuity that pays him $2,000 at the end of each month for the first 10 years and $3,000 per month thereafter. Global Insurance Co. will sell Rashid an annuity of this sort with a rate of return of 4.8% compounded monthly. For how long will the annuity run?

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Question 3

A mortgage of $250,000 requires payments of $1,681.42 per month at 5.25% compounded quarterly. If the purchaser paid an extra $300 per month towards the mortgage, how much sooner would the mortgage be paid off? What amount of interest would the purchaser save?

Accepted Answer

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Question 4

What monthly compounded nominal rate of return would one need to achieve in order to have investments of $100 made at the end of every month for 35 years to accumulate to $1 million?

Accepted Answer

A)  14.50% 
B)  14.76% 
C)  13.62% 
D)  12.93% 
E)  11.35%

Question 5

A $10,000 deposit along with quarterly contributions of $150 accumulates to $18,000 in 5 years. Determine the nominal rate of interest if interest is compounded annually.

Accepted Answer

A)  7.58% 
B)  8.58% 
C)  9.68% 
D)  10.28% 
E)  13.28%

Question 6

What monthly payments for 15 years will pay off a $50,000 loan at 8.25% compounded monthly?

Accepted Answer

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Question 7

Rounding up to the nearest month, for how long will a $100,000 fund sustain beginning-of-the-month withdrawals of $700 if the fund earns 6% compounded monthly?

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Question 8

Calculate the term, expressed in years and months, of the following ordinary annuity.

Accepted Answer

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Question 9

On the date of his granddaughter's birth, Mr. Parry deposited $5,000 in a trust fund earning 6.2% compounded annually. After the granddaughter's 19^th birthday, the trust account is to make end-of-month payments to her for four years to assist her with the costs of post-secondary education. If the trust account earns 4.8% compounded monthly during these four years, what will be the size of the monthly payments?

Accepted Answer

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Question 10

The interest rate charged on a loan of $85,000 is 7.75% compounded annually. If the loan is to be paid off over seven years, calculate the size of the annual payments.

Accepted Answer

A)  $13,084 
B)  $1,314 
C)  $9,599 
D)  $16,187 
E)  $17,492

Question 11

Moses' goal, when he retires from work in seven years, is to have $400,000 in his Retirement Fund. Assuming he achieves his goal and the fund earns 7% compounded semi-annually after he retires, Moses will, at the end of every six months, take $20,000 out of his Retirement Fund. For how long will he be able to do that before the money runs out?

Accepted Answer

A)  15.4 years 
B)  35.0 years 
C)  20.0 years 
D)  12.9 years 
E)  17.5 years

Question 12

Calculate the term, expressed in years and months, of the following ordinary annuity.

Accepted Answer

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Question 13

Jane wants to save $25,000 in five years. If money earns 3.75% compounded quarterly, how much should she deposit monthly to reach her goal?

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Question 14

What quarterly payment is required to accumulate to a future value amount of $10,000 in eight years if money earns 4.5% compounded quarterly?

Accepted Answer

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Question 15

For $150,000, Continental Life Insurance Co. will sell a 20-year annuity paying $1,200 at the end of each month. What effective rate of return does the annuitant earn?

Accepted Answer

The answer of For $150,000, Continental Life Insurance Co. will...

Exam 11: Annuities: Periodic Payment, Number of Payments, and Interest Rate

Howardson Electric obtained a $90,000 loan at 9.75% compounded monthly. What size of semi-annual payments will repay the loan in 10 years?

A mortgage of $250,000 requires payments of $1,681.42 per month at 5.25% compounded quarterly. If the purchaser paid an extra $300 per month towards the mortgage, how much sooner would the mortgage be paid off? What amount of interest would the purchaser save?

What monthly compounded nominal rate of return would one need to achieve in order to have investments of $100 made at the end of every month for 35 years to accumulate to $1 million?

A $10,000 deposit along with quarterly contributions of $150 accumulates to $18,000 in 5 years. Determine the nominal rate of interest if interest is compounded annually.

What monthly payments for 15 years will pay off a $50,000 loan at 8.25% compounded monthly?

Rounding up to the nearest month, for how long will a $100,000 fund sustain beginning-of-the-month withdrawals of $700 if the fund earns 6% compounded monthly?

Calculate the term, expressed in years and months, of the following ordinary annuity.

The interest rate charged on a loan of $85,000 is 7.75% compounded annually. If the loan is to be paid off over seven years, calculate the size of the annual payments.

Calculate the term, expressed in years and months, of the following ordinary annuity.

Jane wants to save $25,000 in five years. If money earns 3.75% compounded quarterly, how much should she deposit monthly to reach her goal?

What quarterly payment is required to accumulate to a future value amount of $10,000 in eight years if money earns 4.5% compounded quarterly?

For $150,000, Continental Life Insurance Co. will sell a 20-year annuity paying $1,200 at the end of each month. What effective rate of return does the annuitant earn?