Business Mathematics Study Set 1

Mathematics

Quiz 10 :

Annuities: Future Value and Present Value

Quiz 10 :

Annuities: Future Value and Present Value

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Jennifer already has $15,500 saved for a down payment for a house and she plans to save another $400 at the end of each month for the next three years. If she earns 8.4% compounded monthly how large will her down payment be in three years?
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Answer:

B

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How much money would you have at the end of 10 years if you made deposits of $4,000 at the end of every three months into an investment that accumulated at 9% compounded quarterly?
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C

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How much money would you have at the end of five years if you made deposits of $450 at the end of every month into an investment that accumulated at 18% compounded monthly?
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B

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Sam will contribute $200 to his RRSP at the end of each month for 15 years and then raise his monthly contribution to $500 at the end of each month for the subsequent 20 years. If his investments earn 11.7% compounded monthly, what will be the value of the investments after the last $500 contribution is made 35 years from now?
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How much money could Louie borrow if he can afford to make monthly payments of $350 for four years at an interest rate of 9% compounded monthly?
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Calculate the present value of an ordinary annuity consisting of payments of $5,000 each, made at the end of every three months for six years. Assume that money is worth 7.2% compounded quarterly.
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Marvin has determined that he can save at least $6 per day by quitting smoking and cutting out one cup of coffee or one can of pop per day. Therefore, he has decided to make contributions of $175 to his Retirement Savings Plan (RSP) at the end of each month for 35 years. He anticipates that his RSP will earn 13.2% compounded monthly. He is 20 years old now and therefore he will be only 55 when this plan is completed. How much money will be in his RSP when he is 55 years of age?
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What amount could you borrow at 6.6% compounded monthly if you can afford to make monthly payments of $775 for 25 years?
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At the end of every six months for the last six years Vincent has borrowed $1,000 from Charley at an interest rate of 11% compounded semi-annually. He has not made any payments to reduce his debt. How much, including interest, does Vincent owe Charley now?
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Terri and Larry plan to invest $5,000 at the end of each year in an individual retirement account earning a rate of return of 11% compounded annually. What will be the value of the account after 15 years?
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Roger spends $60 per month on beer and $60 per month on cigarettes. He is going to quit smoking and cut his beer expense in half by making his own beer at the local U-Brew. At the end of every month the money he saves is going to go into an investment plan earning 12% compounded monthly. How much money should he have after 40 years?
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Sparky will invest $7,500 into his RRSP at the end of each year for 30 years. How much more money will he have in 30 years if he is able to earn 13% compounded annually rather than 11% compounded annually?
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What amount would you have to invest now at 10% compounded semi-annually in order to make withdrawals of $3,500 every half-year for eight years? The first withdrawal is to be made in six months.
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Valerie has made investments of $10,000 at the end of every three months for the last 8 years. She has earned 11% compounded quarterly? What is the value of the investments today?
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What amount would you have to invest now at 7% compounded annually in order to make withdrawals of $20,000 once per year for 25 years? The first withdrawal is to be made one year from now.
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What amount will an ordinary annuity be worth in 25 years if quarterly payments of $1,750 are made and the interest rate is 14% compounded quarterly for the first 15 years and 10% compounded quarterly for the final 10 years?
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Sara quit smoking and saves $80 per month previously spent on cigarettes. She invests the money at 5% compounded monthly. How much will she have in 10 years?
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At the end of every year for 45 years Sabrina invested $500 into her retirement plan. The plan has earned 13% compounded annually over the 45 years. She made the last deposit today. How much money has she accumulated?
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What is the future value of a series of 15 annual payments of $750 starting in one year and earning 7% compounded annually?
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If you want to purchase an annuity providing an income of $2,000 at the end of each month for five years, how much will it cost if the purchase funds earn 18% compounded monthly?
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