Annuities
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You may round your answers to whole dollars.
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| 1. |
(10
pts.) Payments of $5,000 were made at the end of
each quarter into an account that pays 11% compounded
quarterly. How much was in the account after six
years?
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| 2. |
(20
pts.) Payments of $750 at the end of month for 3
years at 9% compounded monthly. Payments
of $550 beginning of month for 4 years at 6%
compounded monthly. Which has greater present
value?
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| 3. |
(15
pts.) Cindy used part of an insurance settlement to
purchase an ordinary annuity that would pay her
$5,000 each six months for 10 years. How much did
the annuity cost if the interest rate is 10% compounded
semiannually?
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| 4. |
(15
pts.) Find the interest earned on an annuity due
if payments of $2,000 per year are made for 15 years
into an account paying 5% compounded annually.
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| 5. |
(20
pts.) For every dollar an employee deposits at the beginning
of each quarter into a company thrift plan paying 9%
compounded quarterly, a company deposits $0.75 into the
employee's account. An employee deposited $600 each quarter
for four years. Find the amount in the account after
this time.
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| 6. |
(20
pts.) Debbie deposited $400 per month into an
ordinary annuity with an interest rate of 6% compounded
monthly, while Lynn deposited $1,100 per quarter into an
annuity due with interest rate of 7% compounded quarterly.
After four years, who has the greater amount on deposit
and who made the most interest? |
