Question 1

Mr. Eusanio contributed $1,500 to his RRSP on March 1 and on September 1 of each year for 25 years. The funds earned 6% compounded monthly for the first 10 years and 7% compounded annually for the next 15 years. What was the value of his RRSP after his contribution on September 1 of the 25^th year?

Accepted Answer

The answer of Mr. Eusanio contributed $1,500 to his RRSP...

Question 2

How much larger will the value of an RRSP be at the end of 25 years if the RRSP earns 9% compounded monthly instead of 9% compounded annually?
In both cases a contribution of $1,000 is made at the end of every three months.

Accepted Answer

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Question 3

Determine the present value (accurate to the cent) of the ordinary general annuity:

Accepted Answer

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Question 4

Monty expects to contribute $300 at the end of every month to his RRSP for the next five years. For the subsequent 10 years, he plans to contribute $2,000 at the end of each calendar quarter. How much will be in his RRSP at the end of the 15 years if the funds earn 8% compounded semi-annually?

Accepted Answer

The answer of Monty expects to contribute $300 at the...

Question 5

What is the value of a contract that will pay $500 at the end of each month for 2 years and $2,000 at the end of each quarter for the subsequent 3 years? Use a discount rate of 6% compounded semi-annually.

Accepted Answer

The answer of What is the value of a contract...

Question 6

What minimum amount of money earning 7% compounded semi-annually will sustain withdrawals of $1,000 at the end of every month for 12 years?

Accepted Answer

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Question 7

Sam is saving $100 per month. How much will he have in his account at the end of five years if his account earns 3.8% compounded quarterly?

Accepted Answer

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Question 8

What will be the amount in an RRSP after 25 years if contributions of $3,000 are made at each year-end for the first seven years and month-end contributions of $500 are made for the subsequent 18 years? Assume that the plan earns 8% compounded quarterly for the first 12 years and 7% compounded semi-annually for the next subsequent years.

Accepted Answer

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Question 9

Determine the present value (accurate to the cent) of the ordinary general annuity:

Accepted Answer

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Question 10

Kristina is saving $150 every two weeks into an account that earns 3.75% compounded quarterly. How much will she have in the account after five years? What amount of interest will Kristina earn from this account?

Accepted Answer

The answer of Kristina is saving $150 every two weeks...

Question 11

A savings plan requires end-of-month contributions of $100 for 25 years. What will be the future value of the plan if it earns 7% compounded quarterly for the first half of the annuity's term and 8% compounded semi-annually for the last half of the term?

Accepted Answer

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Question 12

Jane is making monthly payments of $450 for four years for a car at an interest rate of 5.5% compounded semi-annually. What was the purchase price of the car?

Accepted Answer

The answer of Jane is making monthly payments of $450...

Question 13

What price will a finance company pay for a conditional sale contract requiring 15 monthly payments of $180.50 if the company requires a rate of return of 21% compounded semi-annually? The first payment is due one month from now.

Accepted Answer

The answer of What price will a finance company pay...

Question 14

Joshua wants to structure a 20-year annuity so that its end-of-quarter payments are $2,000 for the first 10 years and $2,500 for the next 10 years. Pacific Life Insurance Co. offers to sell this annuity with a 4.8% compounded monthly rate of return to the annuitant. What amount must Joshua pay to Pacific for the annuity?

Accepted Answer

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Question 15

Ms. Ho is buying a 25% interest in an accounting partnership by end-of - month payments of $537.66, including interest at 8% compounded semi - annually, for 12 years.
a) What valuation was placed on the partnership at the beginning of the payments? (Round to the nearest dollar.)
b) What total amount of interest will she pay over the 12 years?

Accepted Answer

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Question 16

What is the present value of $300 monthly loan payments for two years if money earns 7.5% compounded quarterly?

Accepted Answer

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Question 17

Calculate the periodic interest rate of quarterly payments earning 4.5% compounded annually correct to five decimal places.

Accepted Answer

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Question 18

An ordinary annuity consists of 25 annual payments of $1,000. Calculate its future value if the funds earn:
a) 6% compounded annually.
b) 6% compounded quarterly.
c) 6% compounded monthly.

Accepted Answer

The answer of An ordinary annuity consists of 25 annual...

Question 19

An investment plan requires year-end contributions of $1,000 for 25 years.
What will be the future value of the plan if it earns 7½% compounded monthly for the first 10 years and 8% compounded semi-annually thereafter?

Accepted Answer

The answer of An investment plan requires year-end contributions of...

Question 20

What is the future value of deposits of $250 monthly for five years into an account that pays 3.75% compounded quarterly?

Accepted Answer

The answer of What is the future value of deposits...

Quiz 10: Annuities: Future Value and Present Value

Mr. Eusanio contributed $1,500 to his RRSP on March 1 and on September 1 of each year for 25 years. The funds earned 6% compounded monthly for the first 10 years and 7% compounded annually for the next 15 years. What was the value of his RRSP after his contribution on September 1 of the 25th year?

How much larger will the value of an RRSP be at the end of 25 years if the RRSP earns 9% compounded monthly instead of 9% compounded annually? In both cases a contribution of $1,000 is made at the end of every three months.

Determine the present value (accurate to the cent) of the ordinary general annuity:

Monty expects to contribute $300 at the end of every month to his RRSP for the next five years. For the subsequent 10 years, he plans to contribute $2,000 at the end of each calendar quarter. How much will be in his RRSP at the end of the 15 years if the funds earn 8% compounded semi-annually?

What is the value of a contract that will pay $500 at the end of each month for 2 years and $2,000 at the end of each quarter for the subsequent 3 years? Use a discount rate of 6% compounded semi-annually.

What minimum amount of money earning 7% compounded semi-annually will sustain withdrawals of $1,000 at the end of every month for 12 years?

Sam is saving $100 per month. How much will he have in his account at the end of five years if his account earns 3.8% compounded quarterly?

Determine the present value (accurate to the cent) of the ordinary general annuity:

Kristina is saving $150 every two weeks into an account that earns 3.75% compounded quarterly. How much will she have in the account after five years? What amount of interest will Kristina earn from this account?

A savings plan requires end-of-month contributions of $100 for 25 years. What will be the future value of the plan if it earns 7% compounded quarterly for the first half of the annuity's term and 8% compounded semi-annually for the last half of the term?

Jane is making monthly payments of $450 for four years for a car at an interest rate of 5.5% compounded semi-annually. What was the purchase price of the car?

What price will a finance company pay for a conditional sale contract requiring 15 monthly payments of $180.50 if the company requires a rate of return of 21% compounded semi-annually? The first payment is due one month from now.

What is the present value of $300 monthly loan payments for two years if money earns 7.5% compounded quarterly?

Calculate the periodic interest rate of quarterly payments earning 4.5% compounded annually correct to five decimal places.

An ordinary annuity consists of 25 annual payments of $1,000. Calculate its future value if the funds earn: a) 6% compounded annually. b) 6% compounded quarterly. c) 6% compounded monthly.

An investment plan requires year-end contributions of $1,000 for 25 years. What will be the future value of the plan if it earns 7½% compounded monthly for the first 10 years and 8% compounded semi-annually thereafter?

What is the future value of deposits of $250 monthly for five years into an account that pays 3.75% compounded quarterly?

Mr. Eusanio contributed $1,500 to his RRSP on March 1 and on September 1 of each year for 25 years. The funds earned 6% compounded monthly for the first 10 years and 7% compounded annually for the next 15 years. What was the value of his RRSP after his contribution on September 1 of the 25^th year?