Exam 13: Annuities and Sinking Funds

Jones Co. borrowed money that is to be repaid in 12 years. So that the loan will be paid back at end of the 12^th year, the company invests $8,000 at end of each year at 5% compounded annually. The amount of the original loan was (use the tables in the handbook):

(Multiple Choice)

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Question 21

Interest is not calculated in ordinary annuities.

(True/False)

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Question 22

Bram Johnson invests $500 at the end of each quarter for 10 years. The account earns 12% interest annually. What is the value of the account at the end of 10 years?

(Multiple Choice)

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Question 23

Joe Sullivan invests $9,000 at the end of each year for 20 years. The rate of interest Joe gets is 8% annually. The final value of Joe's investment at the end of the 20^th year on this ordinary annuity is (use the tables in the handbook):

(Multiple Choice)

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Question 24

An annuity is one lump sum payment.

(True/False)

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Question 25

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

(True/False)

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Question 26

Sinking funds utilize the concept of compound interest.

(True/False)

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Question 27

Insurance companies do not use annuities.

(True/False)

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Question 28

At the beginning of each year for 14 years, Sherry Kardell invested $400 that earns 10% annually. What is the future value of Sherry's account in 14 years?

(Multiple Choice)

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Question 29

Ed Sloan invests $1,600 at the beginning of each year for eight years into an account that pays 10% compounded semiannually. The value of the annuity due is (use the tables in the handbook):

(Multiple Choice)

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Question 30

Contingent annuities:

(Multiple Choice)

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Question 31

Ted Williams made deposits of $500 at the end of each year for eight years. The rate is 8% compounded annually. The value of Ted's annuity at the end of eight years is (use the tables in the handbook):

(Multiple Choice)

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Question 32

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):

(Multiple Choice)

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Question 33

Scott deposits $5,000 at the end of each year into an account for five years. Assuming 6% interest annually, what is the value of his account in five years?

(Multiple Choice)

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Question 34

The same table can be used to find the value of an annuity due if two extra periods are added along with the subtraction of one payment.

(True/False)

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Question 35

An annuity due compared with an ordinary annuity results in a:

(Multiple Choice)

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Question 36

Maturity value is equal to principal plus interest.

(True/False)

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Question 37

The value of an annuity is the series of payments and interest.

(True/False)

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Question 38

In an ordinary annuity the interest on a yearly investment starts building interest:

(Multiple Choice)

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Question 39

At the beginning of each year, Bill Ross invests $1,400 semiannually at 8% for nine years. The cash value of the annuity due at the end of the ninth year is (use the tables in the handbook):

(Multiple Choice)

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Question 40

Showing 21 - 40 of 45

Exam 13: Annuities and Sinking Funds

Jones Co. borrowed money that is to be repaid in 12 years. So that the loan will be paid back at end of the 12th year, the company invests $8,000 at end of each year at 5% compounded annually. The amount of the original loan was (use the tables in the handbook):

Interest is not calculated in ordinary annuities.

Bram Johnson invests $500 at the end of each quarter for 10 years. The account earns 12% interest annually. What is the value of the account at the end of 10 years?

Joe Sullivan invests $9,000 at the end of each year for 20 years. The rate of interest Joe gets is 8% annually. The final value of Joe's investment at the end of the 20th year on this ordinary annuity is (use the tables in the handbook):

An annuity is one lump sum payment.

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

Sinking funds utilize the concept of compound interest.

Insurance companies do not use annuities.

At the beginning of each year for 14 years, Sherry Kardell invested $400 that earns 10% annually. What is the future value of Sherry's account in 14 years?

Ed Sloan invests $1,600 at the beginning of each year for eight years into an account that pays 10% compounded semiannually. The value of the annuity due is (use the tables in the handbook):

Contingent annuities:

Ted Williams made deposits of $500 at the end of each year for eight years. The rate is 8% compounded annually. The value of Ted's annuity at the end of eight years is (use the tables in the handbook):

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):

Scott deposits $5,000 at the end of each year into an account for five years. Assuming 6% interest annually, what is the value of his account in five years?

The same table can be used to find the value of an annuity due if two extra periods are added along with the subtraction of one payment.

An annuity due compared with an ordinary annuity results in a:

Maturity value is equal to principal plus interest.

The value of an annuity is the series of payments and interest.

In an ordinary annuity the interest on a yearly investment starts building interest:

At the beginning of each year, Bill Ross invests $1,400 semiannually at 8% for nine years. The cash value of the annuity due at the end of the ninth year is (use the tables in the handbook):

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Jones Co. borrowed money that is to be repaid in 12 years. So that the loan will be paid back at end of the 12^th year, the company invests $8,000 at end of each year at 5% compounded annually. The amount of the original loan was (use the tables in the handbook):

Joe Sullivan invests $9,000 at the end of each year for 20 years. The rate of interest Joe gets is 8% annually. The final value of Joe's investment at the end of the 20^th year on this ordinary annuity is (use the tables in the handbook):