Deck 23: Annuities

Question 1

Charles Moore wants to deposit an equal amount each month into an account that will pay 9% compounded monthly. If Charles wants to end up with a future value of $15,000 after 25 months, how much should he deposit each month? Use Tables 23-1A and 23-1B or a calculator.​

Answer 1

$15,000 ÷ 27.38488 = $547.75 deposit required

Question 2

$7,200 is invested each quarter for 5.5 years. Compute the future value if interest is 8% compounded quarterly. Use Tables 23-1A and 23-1B or a calculator.​

Answer 2

$7,200 × 27.29898 = $196,552.66 future value

Question 3

Each of the following annuities involves future values. Compute the missing numbers. Use Tables 23-1A and 23-1B or a calculator.

Answer 3

Question 4

Nick Yeager, an accountant, will retire in 11 years. Nick invests $10,000 every year into a fund that promises to return 9% compounded annually. Compute the total amount that he will have at the end of 11 years. Use Tables 23-1A and 23-1B or a calculator.​

Question 5

Compute the size of the deposit that is required every year to have a future value of $376,500 at the end of 23 years if the interest rate is 5% compounded annually. Use Tables 23-1A and 23-1B or a calculator.​

Question 6

An investment pays 9% compounded annually. Compute the amount that must be invested each year for 5 years to have a total accumulation of $40,000. Use Tables 23-1A and 23-1B or a calculator.​

Question 7

Each of the following annuities involves future values. Compute the missing numbers. Use Tables 23-1A and 23-1B or a calculator.

Question 8

Each of the following annuities involves future values. Compute the missing numbers. Use Tables 23-1A and 23-1B or a calculator.
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Question 9

Amit Cheeda has a welding business that primarily services heavy equipment on highway construction projects. Amit plans to replace equipment in 5 years, but he does not want to borrow the money. Therefore, he makes 20 quarterly deposits into a sinking fund that will earn 6% compounded quarterly. How much should Amit deposit each quarter if he wants to have $50,000 after the 5 years? Use Tables 23-1A and 23-1B or a calculator.​

Question 10

Brenda Davies inherited a poultry company from her uncle. To make necessary improvements, she began to set aside $6,000 every three months. Brenda earns 8% compounded quarterly. Compute the total amount that she will have after 45 months. Use Tables 23-1A and 23-1B or a calculator.

Question 11

Compute the total that will accumulate in 6 years if $600 is deposited every quarter into a bank account that pays 6% compounded quarterly? Use Tables 23-1A and 23-1B or a calculator.​

Question 12

Compute the future value in three years if $1,925 is invested every three months into a project that pays 16% compounded quarterly. Use Tables 23-1A and 23-1B or a calculator.​

Question 13

Compute the size of the deposit that is required every six months to have a future value of $60,000 at the end of 4 years if the interest rate is 10% compounded semiannually. Use Tables 23-1A and 23-1B or a calculator.​

Question 14

$625 is invested each month for 2 years. Compute the future value if interest is 9% compounded monthly. Use Tables 23-1A and 23-1B or a calculator.​

Question 15

Leslie Yu wants to deposit an equal amount each month into an account that will pay 6% compounded monthly. If Leslie wants to end up with a future value of $10,000 after 22 months, how much should she deposit each month? Use Tables 23-1A and 23-1B or a calculator.​

Question 16

John Lopez, a manager, will retire in 10 years. John invests $12,000 every year into a fund that promises to return 8% compounded annually. Compute the total amount that he will have at the end of 10 years. Use Tables 23-1A and 23-1B or a calculator.​

Question 17

Each of the following annuities involves future values. Compute the missing numbers. Use Tables 23-1A and 23-1B or a calculator.
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Question 18

Each of the following annuities involves future values. Compute the missing numbers. Use Tables 23-1A and 23-1B or a calculator.

Question 19

Each of the following annuities involves future values. Compute the missing numbers. Use Tables 23-1A and 23-1B or a calculator.
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Question 20

Carolyn Green is a single parent who plans to save for her child's education. She can afford to save $250 every month for 2 ½ years. If Carolyn could earn interest of 12% compounded monthly, compute the total amount that she will accumulate during the 2 ½ years. Use Tables 23-1A and 23-1B or a calculator.​

Question 21

Eliberto Ochoa needs to have $7,500 at the end of 15 months to pay for a new roof. Compute the amount that Eliberto should deposit each month into a sinking fund that pays 9% compounded monthly. Use Tables 23-1A and 23-1B or a calculator.​

Question 22

An investment guarantees to return a minimum of 9% compounded annually for 11 years. What is the total present value of 11 annual withdrawals of $3,000 each? Use Tables 23-2A and 23-2B or a calculator.​

Question 23

Compute the present value of 12 semiannual payments of $6,000 each if interest is 8% compounded semiannually. Use Tables 23-2A and 23-2B or a calculator.​

Question 24

Susan Phillips made two $1200 deposits every year (i.e., semiannual) for 10 years. If the investment pays a return of 6% compounded semiannually, how much interest would Susan's investment earn during the 10 years? Use Tables 23-1A and 23-1B or a calculator.​

Question 25

$4,000 (present value) is deposited today at 9% compounded monthly. Compute the monthly payment that can be withdrawn each month for 2 years and empty the account. Use Tables 23-2A and 23-2B or a calculator.​

Question 26

Tables 23-2A and 23-2B ​ ​
Each of the following annuities involves present values. Compute the missing numbers. Use Tables 23-2A and 23-2B or a calculator.​
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Question 27

Tables 23-2A and 23-2B ​ ​
Each of the following annuities involves present values. Compute the missing numbers. Use Tables 23-2A and 23-2B or a calculator.​
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Question 28

An investment guarantees to return a minimum of 8% compounded annually for 12 years. What is the total present value of 12 annual withdrawals of $3,500 each? Use Tables 23-2A and 23-2B or a calculator.​

Question 29

From one of her retirement annuities, Grace Yasui will receive $3,000 each quarter for 5 years. If Grace earns an interest rate of 8% compounded quarterly, compute the present value of these payments. Use Tables 23-2A and 23-2B or a calculator.​

Question 30

Jacklyn Avery made two $900 deposits every year (i.e., semiannual) for 8 years. If the investment pays a return of 8% compounded semiannually, how much interest would Jacklyn's investment earn during the eight years? Use Tables 23-1A and 23-1B or a calculator.​

Question 31

Benoit Asset Management guarantees a minimum return of 6% compounded monthly for 2 years. What is the total present value of 24 annual investment deposits of $6,600 each? Use Tables 23-2A and 23-2B or a calculator.

Question 32

Tables 23-2A and 23-2B ​ ​
Each of the following annuities involves present values. Compute the missing numbers. Use Tables 23-2A and 23-2B or a calculator.

Question 33

Edgar Goloc deposited $80,000 (present value) today at 6% compounded quarterly. Compute the quarterly withdrawal that Edgar can make each quarter for 6.5 years and empty the account. Use Tables 23-2A and 23-2B or a calculator.​

Question 34

For the next two years, Walter and Beatrice Winetrout want to send $500 per month to their daughter in college. To make these payments, compute the amount that the Winetrouts should deposit today into an investment that will return 12% compounded monthly. Use Tables 23-2A and 23-2B or a calculator.​

Question 35

Tables 23-2A and 23-2B ​ ​
Each of the following annuities involves present values. Compute the missing numbers. Use Tables 23-2A and 23-2B or a calculator.

Question 36

Rick Rios has an asphalt paving business. He is trying to calculate whether he should replace some of his current equipment. Rick estimates that he will spend $8,000 every 6 months over the next 4 years to maintain the current equipment. At a rate of 8% compounded semiannually, what is the total present value of the estimated maintenance payments? Use Tables 23-2A and 23-2B or a calculator.​

Question 37

Daniel Miller deposited $90,000 (present value) today at 8% compounded quarterly. Compute the quarterly withdrawal that Daniel can make each quarter for seven years and empty the account. Use Tables 23-2A and 23-2B or a calculator.​

Question 38

Tables 23-2A and 23-2B ​ ​
Each of the following annuities involves present values. Compute the missing numbers. Use Tables 23-2A and 23-2B or a calculator.​
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Question 39

Frances Koo has $43,800 in an investment account that pays her interest at 10% compounded semiannually. Frances will withdraw a specific amount (always the same) every six months for 11 years. After the last withdrawal, the account will be empty. Compute the amount that she will withdraw every six months. Use Tables 23-2A and 23-2B or a calculator.​

Question 40

Tables 23-2A and 23-2B ​ ​
Each of the following annuities involves present values. Compute the missing numbers. Use Tables 23-2A and 23-2B or a calculator.
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Question 41

Lester Newlander needed to borrow $20,000 for his business. Lester's father agreed to loan him the money and amortize it over 21 months with monthly payments and interest on the unpaid balance of 6% compounded monthly. Compute the size of Lester's payments. Use Tables 23-2A and 23-2B or a calculator.​

Question 42

$15,000 (present value) is borrowed today at 12% compounded quarterly. The loan will be amortized over 4 years with equal quarterly payments. Compute the quarterly payments that are required to exactly pay off the loan. Use Tables 23-2A and 23-2B or a calculator.​

Question 43

Kimberly Carter borrowed $8,500 from a bank. The loan was amortized over two years. Kimberly made equal monthly payments of $354.00, which included interest on the unpaid balance of 0.50% per month (6% annually). Complete the first two months of the amortization schedule.
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Question 44

Brendina Gillespie wanted to buy a new car. A bank would loan the sum of $18,000 if Brendina would repay the loan over two years. Compute the size of the monthly payment that Brendina needs to pay in order to amortize the loan with interest of 12% compounded monthly on the unpaid balance. Use Tables 23-2A and 23-2B or a calculator.​

Question 45

Tanya Cordobes borrowed $9,500 from a bank. The loan was amortized over two years. Tanya made equal monthly payments of $434.00, which included interest on the unpaid balance of 0.75% per month (9% annually). Complete the first two months of the amortization schedule.
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Question 46

Judy Baker borrowed $5,000 and agreed to amortize the loan over 7 months by making monthly payments with interest of 9% compounded monthly on the unpaid balance each month. Compute the size of Judy's monthly payments. Use Tables 23-2A and 23-2B or a calculator.​

Question 47

Marilyn Post borrowed $10,000 from her bank, which amortized the loan over 2 ½ years at a rate of 6% compounded monthly. Find the size of Marilyn's monthly payments. Use Tables 23-2A and 23-2B or a calculator.​

Question 48

Jerry Isaacs went to his credit union to inquire about borrowing $8,000. The credit union told him they could amortize an $8,000 loan over two years with 24 payments of $376.59. The interest rate would be 1% per month on the unpaid balance (12% annual rate). Complete the first two months of the amortization schedule.