Question 1

Insurance companies do not use annuities.

Accepted Answer

A) True 
 B)False

Question 2

All annuities due are based on a semiannual payment.

Accepted Answer

A) True 
 B)False

Question 3

Use the tables in the handbook. A customer of Mary Co. promised to make semiannual payments of $700 for six years. Assuming the money is invested by Mary Co. at 8%, compounded semiannually, what is the value today of these payments?

Accepted Answer

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

Question 4

Rachel deposits $2,000 semiannually for three years. What is the value of her investment at the end of three years assuming she can earn 6% interest?

Accepted Answer

The answer of Rachel deposits $2,000 semiannually for three years....

Question 5

Nancy Billows promised to pay her son $600 quarterly for four years. If Nancy can invest her money at 20% in an ordinary annuity, she must invest how much today? (Use the tables in the handbook.)

Accepted Answer

A) $10,759.38 
B) $10,759.83 
C) $14,194.44 
D) $6,861.54 
E) $6,502.68 
A) $10,759.38 
B) $10,759.83 
C) $14,194.44 
D) $6,861.54 
E) $6,502.68

Question 6

Complete present value of an ordinary annuity:
 $$\begin{array} { | l | l | l | l | l | } 
\hline \begin{array} { l } 
\text { Amount of } \
\text { Annuity Expected }
\end{array} & \text { Payment } & & \text { Interest Rate } & \
& \text { Payable } & \text { Years } & \text { Earned } & \text { Present Value } \
\hline \$ 8,500 & \text { Semiannually } & 4 & 10 \% & ? \
\hline
\end{array}$$

Accepted Answer

The answer of Complete present value of an ordinary annuity:
...

Question 7

An annuity due can use the ordinary annuity table if one extra period is added and:

Accepted Answer

A) Add one payment to total value 
B) Subtract one payment from total value 
C) Add two payments to total value 
D) Subtract three payments from total value 
E) None of these 
A) Add one payment to total value 
B) Subtract one payment from total value 
C) Add two payments to total value 
D) Subtract three payments from total value 
E) None of these

Question 8

Match the following terms with their definitions.
-Value of an annuity

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 amount
F)Beginning as well as ending dates, not fixed
G)Sum of series of payments
H)Stream of payments 
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 amount
F)Beginning as well as ending dates, not fixed
G)Sum of series of payments
H)Stream of payments

Question 9

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):

Accepted Answer

A) $38,739.68 
B) $37,399.68 
C) $37,939.86 
D) $37,339.68 
E) None of these 
A) $38,739.68 
B) $37,399.68 
C) $37,939.86 
D) $37,339.68 
E) None of these

Question 10

How much will the Apple Corporation have to set aside each period to have $40,000 eight years from now? Assume money is at 12% compounded semiannually.

Accepted Answer

The answer of How much will the Apple Corporation have...

Question 11

Mike O'Brien plans to deposit $1,250 at the end of every six months for the next eight years at 6% interest compounded semiannually. What is the value of Mike's annuity at the end of eight years?

Accepted Answer

The answer of Mike O'Brien plans to deposit $1,250 at...

Question 12

Complete this ordinary annuity:
 $$\begin{array} { | l | l | l | l | l | } 
\hline \begin{array} { l } 
\text { Amount of } \
\text { Payment }
\end{array} & \begin{array} { l } 
\text { Payment } \
\text { Payable }
\end{array} & \text { Years } & \text { Interest Rate } & \begin{array} { l } 
\text { Value of } \
\text { Annuity }
\end{array} \
\hline \$ 9,000 & \text { Semiannually } & 4 & 10 \% & ? \
\hline
\end{array}$$

Accepted Answer

The answer of Complete this ordinary annuity:
 \[\begin{array} { |...

Question 13

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?

Accepted Answer

A) $12,309 
B) $13,100 
C) $14,000 
D) $12,709 
E) None of these 
A) $12,309 
B) $13,100 
C) $14,000 
D) $12,709 
E) None of these

Question 14

Joe Sullivan invests $9,000 at the end of each year for 20 years. The rate of interest Joe earns 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):

Accepted Answer

A) $411,588.00 
B) $88,362.90 
C) $411,858.00 
D) $88,632.90 
E) None of these 
A) $411,588.00 
B) $88,362.90 
C) $411,858.00 
D) $88,632.90 
E) None of these

Question 15

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):

Accepted Answer

A) $41,344.48 
B) $1,600.00 
C) $38,744.48 
D) $37,744.48 
E) None of these 
A) $41,344.48 
B) $1,600.00 
C) $38,744.48 
D) $37,744.48 
E) None of these

Question 16

The maturity value in compounding is like the value of an annuity.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

At the beginning of each period for 9 years, Scott Sullivan invested $900 at 4% interest compounded semiannually. What is the value of this annuity due?

Accepted Answer

The answer of At the beginning of each period for...

Question 19

Lance Rice has decided to invest $1,200 quarterly for five years in an ordinary annuity at 8%. The total cash value of the annuity at end of year 8 is (use the tables in the handbook):

Accepted Answer

A) $25,196.75 
B) $29,156.76 
C) $22,711.30 
D) $7,039.92 
E) None of these 
A) $25,196.75 
B) $29,156.76 
C) $22,711.30 
D) $7,039.92 
E) None of these

Question 20

Find the value of an investment after four years for a $7,000 ordinary annuity at 10% compounded annually.

Accepted Answer

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

Exam 13: Annuities and Sinking Funds

Insurance companies do not use annuities.

All annuities due are based on a semiannual payment.

Use the tables in the handbook. A customer of Mary Co. promised to make semiannual payments of $700 for six years. Assuming the money is invested by Mary Co. at 8%, compounded semiannually, what is the value today of these payments?

Rachel deposits $2,000 semiannually for three years. What is the value of her investment at the end of three years assuming she can earn 6% interest?

Nancy Billows promised to pay her son $600 quarterly for four years. If Nancy can invest her money at 20% in an ordinary annuity, she must invest how much today? (Use the tables in the handbook.)

Complete present value of an ordinary annuity: Amount of Annuity Expected Payment Interest Rate Payable Years Earned Present Value \ 8,500 Semiannually 4 10\% ?

An annuity due can use the ordinary annuity table if one extra period is added and:

Match the following terms with their definitions. -Value of an annuity

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):

How much will the Apple Corporation have to set aside each period to have $40,000 eight years from now? Assume money is at 12% compounded semiannually.

Mike O'Brien plans to deposit $1,250 at the end of every six months for the next eight years at 6% interest compounded semiannually. What is the value of Mike's annuity at the end of eight years?

Complete this ordinary annuity: Amount of Payment Payment Payable Years Interest Rate Value of Annuity \ 9,000 Semiannually 4 10\% ?

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?

Joe Sullivan invests $9,000 at the end of each year for 20 years. The rate of interest Joe earns 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):

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):

The maturity value in compounding is like the value of an annuity.

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

At the beginning of each period for 9 years, Scott Sullivan invested $900 at 4% interest compounded semiannually. What is the value of this annuity due?

Lance Rice has decided to invest $1,200 quarterly for five years in an ordinary annuity at 8%. The total cash value of the annuity at end of year 8 is (use the tables in the handbook):

Find the value of an investment after four years for a $7,000 ordinary annuity at 10% compounded annually.

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