L11-12 Annuity - Simple and general annuity

In an ordinary annuity, the payments:  

• are made at the end of the payment interval

• are made at the beginning of the payment interval

• are made in the middle of the payment interval

• have intervals of varying length

A payment of $400 was made at the end of each year for five years into a savings account.  The interest rate on the account is 6% compounded annually.  Find the interest earned on the account.

• $254.84

• $174.89

• $240.00

• $200.00

2.     A payment of $500 is made at the end of each month for three years to a savings account.  The interest rate is 12% compounded monthly.  Find the future value of the annuity.

• a)     $24,223.16

• b)    $16,872.00

• c)     $15,150.50

• d)    $21,538.44

Sue’s goal is to have $9000 in her savings account seven years from now.  How much must she set aside at the end of each year at 5% compounded annually to meet this goal?

a)    

b)    $1285.71

c)     $1555.38

d)    $1089.66

• $1105.38

• $1285.71

• $1555.38

• $1089.66

Janice bought a dining room suite for $500 down and payments of $55.29 at the end of every month for four years.  Interest on the purchase is 7.2% compounded monthly.  What was the purchase price of the suite?

• a.     $2300.00

• b.     $3065.00

• c.     $3565.00

• d.     $2800.00

How many month-end payments of $275 are required to reach a savings goal of $5000 if the interest rate on the savings is 6% compounded monthly?

• 17

• 18

• 19

• 20

A property worth $20,000 is purchased for 5% down and quarterly payments of $388.63 for 15 years.  What nominal rate of interest compounded semiannually was applied to the purchase?

• 2.86%

• 2.13%

•   2.08%

• 2.80%