Question 1

Complete this annuity due: (round answer to the nearest cent)
 $$\begin{array} { | l | l | l | l | l | } 
\hline \begin{array} { l } 
\text { Amount of } \
\text { Payment }
\end{array} & \begin{array} { l } 
\text { Payment } \
\text { Payable }
\end{array} & \text { Years } & \text { Interest Rate } & \begin{array} { l } 
\text { Value of } \
\text { Annuity }
\end{array} \
\hline \$ 750 & \text { Quarterly } & 4 & 16 \% & ? \
\hline
\end{array}$$

Accepted Answer

The answer of Complete this annuity due: (round answer to...

Question 2

Alice Hall made deposits of $300 semiannually to Rey Bank, which pays 8% interest compounded semiannually. After five years Alice made no more deposits. What would be the balance in the account four years from the last deposit?

Accepted Answer

The answer of Alice Hall made deposits of $300 semiannually...

Question 3

The present value of an annuity looks from the present to the future.

Accepted Answer

A) True 
 B)False

Question 4

Angel Rowe wants to receive $7,500 each year for the next 25 years. Assume a 5% interest rate compounded annually. How much should Angel invest today?

Accepted Answer

The answer of Angel Rowe wants to receive $7,500 each...

Question 5

A contingent annuity has a fixed amount of payments.

Accepted Answer

A) True 
 B)False

Question 6

Maturity value is equal to principal plus interest.

Accepted Answer

A) True 
 B)False

Question 7

Match the following terms with their definitions.
-Contingent 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 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 8

Connie made deposits of $2,000 at the beginning of each year for four years. The rate she earned is 5% annually. What is the value of Connie's account in four years?

Accepted Answer

A) $11,051.00 
B) $8,260.20 
C) $8,260.00 
D) $9,051.20 
E) None of these 
A) $11,051.00 
B) $8,260.20 
C) $8,260.00 
D) $9,051.20 
E) None of these

Question 9

An annuity is one lump sum payment.

Accepted Answer

A) True 
 B)False

Question 10

An annuity is:

Accepted Answer

A) Not used by lotteries today 
B) A one-time payment 
C) A stream of payments 
D) Never made up of equal payments 
E) None of these 
A) Not used by lotteries today 
B) A one-time payment 
C) A stream of payments 
D) Never made up of equal payments 
E) None of these

Question 11

Use the tables in the handbook. What must you invest today in order to receive an annuity of $6,000 for four years semiannually at 12%? All withdrawals will be made at the end of each period.

Accepted Answer

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

Question 12

Match the following terms with their definitions.
-Annuities certain

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 13

Use the tables in the handbook. What is the value of an investment after three years on an ordinary annuity of $5,000 made semiannually at 12%?

Accepted Answer

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

Question 14

Use the tables in the handbook. Given an annuity due of $5,000, 12% semiannually for three years, what is the value of the investment at the end of three years?

Accepted Answer

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

Question 15

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):

Accepted Answer

A) $127,336.80 
B) $70,905.60 
C) $127,636.80 
D) $70,950.60 
E) None of these 
A) $127,336.80 
B) $70,905.60 
C) $127,636.80 
D) $70,950.60 
E) None of these

Question 16

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

Accepted Answer

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

Question 17

Use the tables in the handbook. Alvin Roz puts $2,000 in a bond at the end of every six months. The bank pays 12%, compounded semiannually. Assuming Alvin does this for three years; calculate the amount of total interest he will receive.

Accepted Answer

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

Question 18

Al Wright puts $2,000 in a bank at the end of every six months. The bank pays 8% compounded semiannually. Assuming Al does this for four years, what is the total interest he will receive?

Accepted Answer

The answer of Al Wright puts $2,000 in a bank...

Question 19

How much will the Apple Corporation have to set aside each year to have $60,000 ten years from now? Assume interest is at 10% compounded semiannually.

Accepted Answer

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

Question 20

A sinking fund:

Accepted Answer

A) Requires at the beginning one lump sum payment 
B) Is really not an annuity 
C) Aids in meeting a future obligation 
D) Does not compound its money 
E) None of these 
A) Requires at the beginning one lump sum payment 
B) Is really not an annuity 
C) Aids in meeting a future obligation 
D) Does not compound its money 
E) None of these

Exam 13: Annuities and Sinking Funds

Complete this annuity due: (round answer to the nearest cent) Amount of Payment Payment Payable Years Interest Rate Value of Annuity \ 750 Quarterly 4 16\% ?

Alice Hall made deposits of $300 semiannually to Rey Bank, which pays 8% interest compounded semiannually. After five years Alice made no more deposits. What would be the balance in the account four years from the last deposit?

The present value of an annuity looks from the present to the future.

Angel Rowe wants to receive $7,500 each year for the next 25 years. Assume a 5% interest rate compounded annually. How much should Angel invest today?

A contingent annuity has a fixed amount of payments.

Maturity value is equal to principal plus interest.

Match the following terms with their definitions. -Contingent annuities

Connie made deposits of $2,000 at the beginning of each year for four years. The rate she earned is 5% annually. What is the value of Connie's account in four years?

An annuity is one lump sum payment.

An annuity is:

Use the tables in the handbook. What must you invest today in order to receive an annuity of $6,000 for four years semiannually at 12%? All withdrawals will be made at the end of each period.

Match the following terms with their definitions. -Annuities certain

Use the tables in the handbook. What is the value of an investment after three years on an ordinary annuity of $5,000 made semiannually at 12%?

Use the tables in the handbook. Given an annuity due of $5,000, 12% semiannually for three years, what is the value of the investment at the end of three years?

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):

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

Use the tables in the handbook. Alvin Roz puts $2,000 in a bond at the end of every six months. The bank pays 12%, compounded semiannually. Assuming Alvin does this for three years; calculate the amount of total interest he will receive.

Al Wright puts $2,000 in a bank at the end of every six months. The bank pays 8% compounded semiannually. Assuming Al does this for four years, what is the total interest he will receive?

How much will the Apple Corporation have to set aside each year to have $60,000 ten years from now? Assume interest is at 10% compounded semiannually.

A sinking fund:

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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):