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Chapter 5: Time Value of money (Annuities) 5) Solve for future value of an annuity: If you deposit $500 each month (at the end of the month) into an account, how much will be in the account after 8 years if the interest earned is a nominal 6% per year (compounded monthly)? 6) Present value of an annuity: What is the highest price car you can afford if you want your monthly payments to be $300 a month and you can put down $2,500. The interest rate is a nominal 4% per year compounded monthly. You want to make payments over a 5 year period. 7) Solve for Interest in an annuity? You started saving $800 a month (at the end of each month) 20 years ago. Today you notice the balance on the account is now $900,000. What is the nominal interest rate you earned on your savings? 8) Solve for Number of periods in an annuity: You have $15,000 saved today and plan on saving another $400 a month. You want the account to be worth $1.8 million. How long will it take to reach your goal if the interest rate is 8% per year compounded monthly? 9) Effective annual rate: A credit card charges you an APR of 14% per year with monthly compounding. What is the Effective Annual Rate?

          Chapter 5: Time Value of money (Annuities)
5) Solve for future value of an annuity: If you deposit $500 each month (at the end of the month) into an
account, how much will be in the account after 8 years if the interest earned is a nominal 6% per year
(compounded monthly)?
6) Present value of an annuity: What is the highest price car you can afford if you want your monthly
payments to be $300 a month and you can put down $2,500. The interest rate is a nominal 4% per year
compounded monthly. You want to make payments over a 5 year period.
7) Solve for Interest in an annuity? You started saving $800 a month (at the end of each month) 20 years
ago. Today you notice the balance on the account is now $900,000. What is the nominal interest rate
you earned on your savings?
8) Solve for Number of periods in an annuity: You have $15,000 saved today and plan on saving another
$400 a month. You want the account to be worth $1.8 million. How long will it take to reach your goal if
the interest rate is 8% per year compounded monthly?
9) Effective annual rate: A credit card charges you an APR of 14% per year with monthly compounding.
What is the Effective Annual Rate?

Chapter 5: Time Value of money (Annuities)
5) Solve for future value of an annuity: If you deposit 500 each month (at the end of the month) into an
account, how much will be in the account after 8 years if the interest earned is a nominal 6% per year
(compounded monthly)?
6) Present value of an annuity: What is the highest price car you can afford if you want your monthly
payments to be300 a month and you can put down 2,500. The interest rate is a nominal 4% per year
compounded monthly. You want to make payments over a 5 year period.
7) Solve for Interest in an annuity? You started saving800 a month (at the end of each month) 20 years
ago. Today you notice the balance on the account is now 900,000. What is the nominal interest rate
you earned on your savings?
8) Solve for Number of periods in an annuity: You have15,000 saved today and plan on saving another
400 a month. You want the account to be worth1.8 million. How long will it take to reach your goal if
the interest rate is 8% per year compounded monthly?
9) Effective annual rate: A credit card charges you an APR of 14% per year with monthly compounding.
What is the Effective Annual Rate?

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