Annuities

When is payment made on an ordinary annuity?

• Beginning of the period
• Middle of the period
• First 3 days of the period
• End of the period

When is payment made on an annuity due?

• Beginning of the period
• Middle of the period
• Three times during the period
• End of the period

What is the main difference between an annuity and a compound interest investment?

• A series of payments is made for annuities.
• Compound interest investments are for a shorter time period.
• The cash value of annuities can be figured using the compound interest table.
• Annuities involve a series of payments of usually differing amounts, whereas compound investments involve regular contributions of equal amounts.

An ordinary annuity was purchased 5 years ago. The annuity pays 8% compounded quarterly. The quarterly payments have been $100. What is the amount of interest earned on the annuity to date?

• $2,429.74

• $1,551.78

• $2,867.25

• $1,561.83

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Maria deposits $100 quarterly for 6 years into an ordinary annuity that earns 4% compounded quarterly. How much interest will her account have earned?

• $1,176.43

• $615.20

• $8,376.43

• $2,697.35

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John won an ordinary annuity that pays 1,000 quarterly for three years. What is the present value of this annuity if the money is worth 16% compounded quarterly?

• $15,025.81

• $6,373.02

• $10,999.03

• $5,678/90

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Rosemary contributes $800 monthly to an ordinary annuity at 12% compounded monthly for three years. Find her future value.

• $122,000.00

• $34,461.50

• $34,806.12

• $38,596.88

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Change 6.75% to a decimal.

• 67.5
• .675
• 675
• .0675

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Interest paid on the original principal plus the accumulated interest. 

• Simple Interest
• Compound Interest
• Exact Interest
• Ordinary Interest

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What do you call the amount earned or paid with the use of money?

• Interest

• Principal

• Term

• Rate