Deck 12: Annuities

Question 1

When the annuity payment is made at the end of each period, it is known as an ____________________ annuity.

Answer 1

ordinary

Question 2

A(n) ____________________ is the payment or receipt of equal cash amounts per period for a specified amount of time.

Answer 2

annuity

Question 3

Kia deposited $1,200, at the BEGINNING of each year for 30 years in a credit union account. If the account paid 12% interest, compounded annually, use the appropriate formula to find the future value of her account.

A) $311,097.91
B) $288,399.20
C) $298,569.33
D) $324,351.13

Answer 3

$324,351.13

Question 4

____________________ annuities are those in which the annuity payments and compounding periods do not coincide.

Question 5

Benigno deposited $1,000, at the END of every month for 3 years in a savings account. If the account paid 12% interest, compounded monthly, use Table 12-1 from your text to find the future value of his account.

A) $3,374.40
B) $4,320.00
C) $40,320.00
D) $43,076.88

Question 6

____________________ annuities are annuities based on an uncertain time period.

Question 7

Annuities ____________________ are annuities that have a specified number of time periods.

Question 8

Lidia deposits $900 at the END of each year for 9 years in a savings account. The account pays 8% interest, compounded annually. Lidia calculates that the future value of the ordinary annuity is $11,238.80. What would be the future value if deposits are made at the BEGINNING of each period rather than the END?

A) $11,238.80
B) $12,137.90
C) $12,960.00
D) $13,037.91

Question 9

Shiraz deposited $500 at the END of each year for 18 years in a savings account. If the account paid 5% interest, compounded annually, use Table 12-1 from your text to find the future value of his account.

A) $12,822.71
B) $12,920.19
C) $14,066.19
D) $15,452.83

Question 10

Use Table 12-1 of your text to find the future value of $1,300 deposited at the BEGINNING of every three months, for 3 years if the bank pays 12% interest, compounded quarterly.

A) $18,789.65
B) $19,955.20
C) $19,003.13
D) $20,830.22

Question 11

Peter deposits $500 at the END of every month for 3 years in a savings account. The account pays 12% interest, compounded monthly. Peter calculates that the future value of the ordinary annuity is $21,538.44. What would be the future value if deposits were made at the BEGINNING of each period rather than the END? (Calculate the future value by formula)

A) $21,753.83
B) $25,734.44
C) $22,273.44
D) $22,349.85

Question 12

____________________ are accounts used to set aside equal amounts of money at the end of each period, at compound interest, for the purpose of saving for a future obligation.

Question 13

The amount that must be deposited now at compound interest to yield a series of equal periodic payments is the ____________________ value of an annuity.

Question 14

The ____________________ value of an annuity is also known as the amount of an annuity.

Question 15

Lorna deposited $1,500, at the BEGINNING of every six months for 12 years, in an account at her credit union. If the account paid 6% interest, compounded semiannually, use Table 12-1 from your text to find the future value of her account.

A) $50,549.75
B) $51,815.72
C) $51,930.92
D) $53,188.89

Question 16

John deposited $2,000, at the END of every month for 2 years in a savings account. If the account paid 6% interest, compounded monthly, use Table 12-1 from your text to find the future value of his account.

A) $53,374.40
B) $44,320.00
C) $50,320.10
D) $50,863.92

Question 17

Use Table 12-1 of your text to find the future value of $300 deposited at the BEGINNING of every year, for 15 years if the bank pays 6% interest compounded annually.

A) $3,500.00
B) $6,982.79
C) $7,401.76
D) $4,770.00

Question 18

____________________ is the opposite of a sinking fund.

Question 19

When the payment is made at the beginning of each period, it is called an ____________________.

Question 20

A(n) ____________________ annuity is one in which the number of compounding periods per year coincides with the number of annuity payments per year.

Question 21

Kirk wishes to accumulate $10,000 in 3 years for a down payment on a house. Use Table 12-1 from your text to find the sinking fund payment he would need to make at the END of every month, at 6% interest compounded monthly.

A) $2,773.58
B) $3,733.58
C) $254.22
D) $356.59

Question 22

Second Hand Software needs to accumulate $12,000 in 3 years to meet future needs. What sinking fund payment would they need to make at the end of each year, at 6% interest compounded annually? (Use Table 12-1 from your text)

A) $4,110.34
B) $3,769.32
C) $4,392.65
D) $4,634.15

Question 23

Linens Plus wishes to pay off a debt of $15,000 in 2 years. What amortization payment would they need to make every month, at 12% interest compounded monthly? (Use Table 12-2 from your text)

A) $625.00
B) $664.81
C) $684.10
D) $706.10

Question 24

Ryan must pay off a loan of $3,500 in 5 years. Use the appropriate formula to find the amortization payment he would need to make each six months, at 12% interest compounded semiannually.

A) $475.54
B) $970.93
C) $195.69
D) $394.89

Question 25

What amortization payment would you need to make every month, at 12% interest compounded monthly, to pay off a loan of $8,500 in 3 years? (Use Table 12-2 from your text)

A) $3,538.97
B) $282.32
C) $197.32
D) $279.53

Question 26

Jon wishes to accumulate $4,500 in 8 years for a long vacation. Use Table 12-1 from your text to find the sinking fund payment he would need to make at the END of every six months, at 4% interest compounded semiannually.

A) $241.43
B) $233.97
C) $207.63
D) $344.10

Question 27

Best Ribs wishes to pay off a debt of $40,000 in 7 years. What amortization payment would they need to make each six months, at 6% interest compounded semiannually? (Use Table 12-2 from your text)

A) $3,541.05
B) $3,910.63
C) $2,727.79
D) $2,955.32

Question 28

What amortization payment would you need to make each year, at 12% interest compounded annually, to pay off a loan of $4,000 in 6 years? (Use Table 12-2 from your text)

A) $477.11
B) $486.45
C) $972.90
D) $954.22

Question 29

Use the appropriate formula to find how much you should deposit now at 7% interest, compounded annually, to yield an annuity payment of $800 at the BEGINNING of each year, for 14 years.

A) $6,996.37
B) $7,870.92
C) $7,486.12
D) $8,421.89

Question 30

Use Table 12-2 in your text to find how much should be deposited now at 8% interest, compounded semiannually, to yield an annuity payment of $400 at the END of each 6 months, for 1 year.

A) $859.24
B) $754.44
C) $645.59
D) $923.72

Question 31

Mechanic's Hardware needs to accumulate $41,000 in 3 years to purchase new equipment. What sinking fund payment would they need to make at the END of each month, at 6% interest compounded monthly? (Use Table 12-1 from your text)

A) $2,111.35
B) $1,885.21
C) $1,042.30
D) $1,399.56

Question 32

Your bank pays 9% interest, compounded annually. Use the appropriate formula to find how much you should deposit now to yield an annuity payment of $800 at the END of each year, for 10 years.

A) $5,134.13
B) $6,099.86
C) $5,596.20
D) $6,454.28

Question 33

Hot Wheels Depot needs to accumulate $25,000 in 6 years to purchase new equipment. What sinking fund payment would they need to make at the END of every three months, at 8% interest compounded quarterly? (Use Table 12-1 from your text)

A) $821.78
B) $679.42
C) $545.96
D) $620.42

Question 34

Use Table 12-2 from your text to find how much should be deposited now at 8% interest, compounded semiannually, to yield an annuity payment of $400 at the BEGINNING of each six months, for 2 years.

A) $1,510.04
B) $1,110.04
C) $1,451.96
D) $1,354.22

Question 35

Arun wants to have $500 at the END of every year for 20 years. The bank pays 11% interest, compounded annually. Arun calculates that the present value of the ordinary annuity is $3,981.67. What would be the present value if payments were to be received at the BEGINNING of every period rather than the END?

A) $5,183.91
B) $5,525.98
C) $4,043.26
D) $4,419.65

Question 36

Connie wants to have an annuity payment of $2,000 at the END of every three months. How much should she deposit now at 6% interest, compounded quarterly, to yield this payment for 3 years? (Use Table 12-2 in your text)

A) $21,815.02
B) $20,786.85
C) $21,577.10
D) $22,783.26

Question 37

Your bank pays 8% interest, compounded quarterly. Use Table 12-2 from your text to find how much you should deposit now to yield an annuity payment of $1,300 at the BEGINNING of each three months, for 2 years.

A) $9,713.59
B) $10,823.13
C) $9,523.13
D) $8,413.59

Question 38

Jeff wishes to accumulate $5,000 in 5 years. Use the appropriate formula to find the sinking fund payment she would need to make at the end of each year, at 5% interest, compounded annually.

A) $989.94
B) $917.47
C) $904.87
D) $949.87

Question 39

Robert wants to have $2,300 at the END of every three months for 8 years. The bank pays 8% interest, compounded quarterly. Robert calculates that the present value of the ordinary annuity is $53,977.16. What would be the present value if payments were to be received at the BEGINNING of every period rather than the END? (Use Table 12-2 from your text)

A) $52,016.20
B) $55,056.71
C) $55,344.83
D) $55,986.21

Question 40

Suppose that your bank pays 10% interest, compounded semiannually. Use Table 12-2 of your text to find how much should be deposited now to yield an annuity payment of $400 at the END of every six months, for 4 years.

A) $2,585.28
B) $3,819.64
C) $1,267.95
D) $1,856.40

Question 41

What sinking fund payment would you need to make at the END of each three months, at 12% interest compounded quarterly, to amount to $3,500 in 4 years? (Use Table 12-1 from your text)

A) $232.93
B) $732.32
C) $481.05
D) $173.64

Question 42

Use Table 12-1 in your text to calculate the future value of the annuity due, rounding to the nearest cent:

Question 43

Use Table 12-1 from your text to calculate the future value of the annuity due, rounding to the nearest cent:

Question 44

Use Table 12-1 from your text to calculate the future value of the annuity due, rounding to the nearest cent:

Question 45

Leon's Plumbing wishes to pay off a debt of $21,000 in 6 years. What amortization payment would they need to make every three months, at 6% interest compounded quarterly? (Use Table 12-2 from your text)

A) $722.57
B) $1,032.91
C) $1,048.41
D) $733.41

Question 46

Use Table 12-1 from your text to calculate the future value of the ordinary annuity, rounding to the nearest cent:

Question 47

Use Table 12-1 from your text to calculate the future value of the ordinary annuity, rounding to the nearest cent:

Question 48

Use the appropriate formula to find how much you should deposit now at 9% interest, compounded annually, to yield an annuity payment of $1,200 at the BEGINNING of each year, for 18 years.

A) $10,252.36
B) $7,870.92
C) $7,486.12
D) $11,452.36

Question 49

Use Table 12-1 from your text to calculate the future value of the annuity due, rounding to the nearest cent:

Question 50

Use Table 12-2 from your text to calculate the present value of the ordinary annuity, rounding to the nearest cent.

Question 51

Use Table 12-1 from your text to calculate the future value of the ordinary annuity, rounding to the nearest cent:

Question 52

Use Table 12-1 from your text to calculate the future value of the ordinary annuity, rounding to the nearest cent:

Question 53

Use the appropriate formula to find the amortization payment you would need to make each three months, at 8% interest compounded quarterly, to pay off a loan of $8,000 in 6 years.

A) $1,730.52
B) $422.97
C) $1,288.29
D) $316.61

Question 54

Find the amortization payment you would need to make every six months, at 6% interest compounded semiannually, to pay off a loan of $4,000 in 6 years. (Use Table 12-2 from text)

A) $767.41
B) $813.45
C) $390.14
D) $401.85

Question 55

Use Table 12-1 from your text to calculate the future value of the ordinary annuity, rounding to the nearest cent:

Question 56

Use Table 12-1 from your text to calculate the future value of the annuity due, rounding to the nearest cent:

Question 57

What amortization payment would you need to make each year, at 14% interest compounded semiannually, to pay off a loan of $24,000 in 4 years? (Use Table 12-2 from your text)

A) $5,000.00
B) $4,086.45
C) $4,019.23
D) $954.22

Question 58

Find the sinking fund payment you would need to make at the end of each year, at 5% interest compounded annually, to amount to $8,000 in 2 years. (Use the appropriate formula)

A) $2,719.86
B) $1,537.27
C) $2,128.56
D) $3,902.44

Question 59

Dempsey Electric wishes to pay off a debt of $28,000 in 3 years. What amortization payment would they need to make every month, at 12% interest compounded monthly? (Use Table 12-2 from your text)

A) $625.00
B) $844.12
C) $930.00
D) $706.10

Question 60

Use Table 12-1 from your text to calculate the future value of the annuity due, rounding to the nearest cent:

Question 61

For the sinking funds, use Table 12-1 from your text to calculate the amount of the periodic payments needed to amount to the financial objective (future value of the annuity), rounding to the nearest cent:

Question 62

Use Table 12-2 from your text to calculate the present value of the annuity due, rounding to the nearest cent:

Question 63

Use Table 12-2 from your text to calculate the amount of the periodic payment required to amortize (pay off) the loans, rounding to the nearest cent:

Question 64

For the sinking funds, use Table 12-1 from your text to calculate the amount of the periodic payments needed to amount to the financial objective (future value of the annuity), rounding to the nearest cent:

Question 65

Use Table 12-2 from your text to calculate the present value of the ordinary annuity, rounding to the nearest cent.

Question 66

Use Table 12-2 from your text to calculate the amount of the periodic payment required to amortize (pay off) the loans, rounding to the nearest cent:

Question 67

For the sinking funds, use Table 12-1 from your text to calculate the amount of the periodic payments needed to amount to the financial objective (future value of the annuity), rounding to the nearest cent:

Question 68

Use Table 12-2 from your text to calculate the present value of the annuity due, rounding to the nearest cent:

Question 69

Use Table 12-2 from your text to calculate the amount of the periodic payment required to amortize (pay off) the loans, rounding to the nearest cent:

Question 70

For the sinking funds, use Table 12-1 from your text to calculate the amount of the periodic payments needed to amount to the financial objective (future value of the annuity), rounding to the nearest cent:

Question 71

Use Table 12-2 from your text to calculate the amount of the periodic payment required to amortize (pay off) the loans, rounding to the nearest cent:

Question 72

For the sinking funds, use Table 12-1 from your text to calculate the amount of the periodic payments needed to amount to the financial objective (future value of the annuity), rounding to the nearest cent:

Question 73

Use Table 12-2 in your text to calculate the amount of the periodic payment required to amortize (pay off) the loans, rounding to the nearest cent:

Question 74

Use Table 12-2 from your text to calculate the amount of the periodic payment required to amortize (pay off) the loans, rounding to the nearest cent:

Question 75

Use Table 12-2 from your text to calculate the present value of the ordinary annuity, rounding to the nearest cent.

Question 76

Use Table 12-2 from your text to calculate the present value of the ordinary annuity, rounding to the nearest cent.

Question 77

Use Table 12-2 from your text to calculate the present value of the annuity due, rounding to the nearest cent:

Question 78

Use Table 12-2 from your text to calculate the present value of the annuity due, rounding to the nearest cent:

Question 79

Use Table 12-2 from your text to calculate the present value of the ordinary annuity, rounding to the nearest cent.

Question 80

Use Table 12-2 from your text to calculate the present value of the annuity due, rounding to the nearest cent: