Fundamentals Of Business Mathematics In Canada 3rd Edition By Jerome – Test Bank
Chapter 11
Annuities: Periodic Payment, Number of Payments, and Interest Rate
Multiple Choice Questions
What regular investment, made at the end of every three months and earning 10% compounded quarterly, would accumulate to $475,000 in 20 years?
A.$3,492.86
B. $17,616.21
C. $7,856.83
D. $1,912.37
E. $7,916.67
Accessibility: Keyboard Navigation
Difficulty: Easy
Gradable: automatic
Learning Objective: 11-01 Calculate the periodic payment in ordinary annuities
Topic: 11-01 Calculating the Periodic Payment in Ordinary Annuities
Topic: 11-02 Algebraic Method
Marvin hopes to accumulate $1,000,000 in his retirement plan by making equal contributions at the end of each month for 35 years. He is planning to earn 10.8% compounded monthly. What amount should he deposit every month?
A.$119.90
B. $213.87
C. $569.05
D. $963.27
E. $2,380.95
Accessibility: Keyboard Navigation
Difficulty: Easy
Gradable: automatic
Learning Objective: 11-01 Calculate the periodic payment in ordinary annuities
Topic: 11-01 Calculating the Periodic Payment in Ordinary Annuities
Topic: 11-02 Algebraic Method
Sally has invested a constant amount at the end of every six months for the last 40 years. She has made wise investment decisions and has earned a return of 16.4% compounded semi-annually. Today the value of her savings has reached $2,500,000. What amount has she been investing every half-year?
A.$91.66
B. $375.29
C. $5,834.15
D. $61,983.84
E. $205,375.29
Accessibility: Keyboard Navigation
Difficulty: Easy
Gradable: automatic
Learning Objective: 11-01 Calculate the periodic payment in ordinary annuities
Topic: 11-01 Calculating the Periodic Payment in Ordinary Annuities
Topic: 11-02 Algebraic Method
How much will Clarence have to invest at the end of every year at 11% compounded annually if he is going to accumulate $25,000 in five years?
A.$2,758.93
B. $3,870.52
C. $4,014.25
D. $4,989.01
E. $5,562.50
Accessibility: Keyboard Navigation
Difficulty: Easy
Gradable: automatic
Learning Objective: 11-01 Calculate the periodic payment in ordinary annuities
Topic: 11-01 Calculating the Periodic Payment in Ordinary Annuities
Topic: 11-02 Algebraic Method
A loan of $17,200 at 9% compounded monthly is to be paid off by equal payments to be made at the end of every month for three years. What is the size of the monthly payment?
A.$561.48
B. $679.49
C. $606.78
D. $477.78
E. $546.96
Accessibility: Keyboard Navigation
Difficulty: Easy
Gradable: automatic
Learning Objective: 11-01 Calculate the periodic payment in ordinary annuities
Topic: 11-01 Calculating the Periodic Payment in Ordinary Annuities
Topic: 11-02 Algebraic Method
Vince has $35,000 to purchase an annuity that will provide him with equal payments at the end of every three months for the next six years. If the funds earn 8% compounded quarterly, what is the size of the quarterly payments he will receive?
A.$2,335
B. $1,850
C. $3,734
D. $3,324
E. $7,571
Accessibility: Keyboard Navigation
Difficulty: Easy
Gradable: automatic
Learning Objective: 11-01 Calculate the periodic payment in ordinary annuities
Topic: 11-01 Calculating the Periodic Payment in Ordinary Annuities
Topic: 11-02 Algebraic Method
The interest rate charged on a loan of $85,000 is 7.75% compounded annually. If the loan is to be paid off over seven years, calculate the size of the annual payments.
A.$13,084
B. $1,314
C. $9,599
D. $16,187
E. $17,492
Accessibility: Keyboard Navigation
Difficulty: Easy
Gradable: automatic
Learning Objective: 11-01 Calculate the periodic payment in ordinary annuities
Topic: 11-01 Calculating the Periodic Payment in Ordinary Annuities
Topic: 11-02 Algebraic Method
Fred must pay a $25,000 obligation one year from now. What end-of-month payments for twelve months would put the creditor in an equivalent financial position if the creditor can earn 9% compounded monthly?
A.$2,186.29
B. $1,863.67
C. $1,998.79
D. $2,170.01
E. $1,983.91
Accessibility: Keyboard Navigation
Difficulty: Moderate
Gradable: automatic
Learning Objective: 11-01 Calculate the periodic payment in ordinary annuities
Topic: 11-01 Calculating the Periodic Payment in Ordinary Annuities
Topic: 11-02 Algebraic Method
An investment of $25,000 is made for a 10-year term. After the term expires, equal withdrawals will be made at the end of every month for 15 years. What will the size of the monthly withdrawal be if the investment earns 9% compounded monthly for both the deposit and withdrawal periods.
A.$253.57
B. $161.95
C. $621.58
D. $251.68
E. $616.96
Accessibility: Keyboard Navigation
Difficulty: Moderate
Gradable: automatic
Learning Objective: 11-01 Calculate the periodic payment in ordinary annuities
Topic: 11-01 Calculating the Periodic Payment in Ordinary Annuities
Topic: 11-02 Algebraic Method
If the invested funds earn 13% compounded quarterly what amount invested at the end of every six months for 15 years will accumulate to $295,000?
A.$23,415
B. $22,838
C. $5,953
D. $1,649
E. $3,352
Accessibility: Keyboard Navigation
Difficulty: Moderate
Gradable: automatic
Learning Objective: 11-01 Calculate the periodic payment in ordinary annuities
Topic: 11-01 Calculating the Periodic Payment in Ordinary Annuities
Topic: 11-02 Algebraic Method
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