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Contemporary Mathematics for Business and Consumers

Robert Brechner

Chapter 12

Annuities - all with Video Answers

Educators

Chapter Questions

01:05

Problem 1

For the following sinking funds, use Table 12-1 to calculate the amount of the periodic payments needed to amount to the financial objective (future value of the annuity).
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Sinking Fund } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { (Objective) }
\end{array} \\
\hline \_\_\_\ & \text { every 6 months } & 8 & 10 & \text { semiannually } & \$ 50,000
\end{array}
$$

Breanna Ollech
Breanna Ollech
Numerade Educator
01:05

Problem 1

Note: Round to the nearest cent when necessary.
Use Table 12-1 to calculate the future value of the following ordinary annuities.
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{l}
\text { Nominal } \\
\text { Rate (\%) }
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 1,000 & \text { every } 3 \text { months } & 4 & 8 & \_\_\_\_\_\_\_\_ &\_\_\_\_\_\_\_\_
\end{array}
$$

Breanna Ollech
Breanna Ollech
Numerade Educator
01:05

Problem 1

Note: Round to the nearest cent when necessary.
Use Table 12-2 to calculate the present value of the following ordinary annuities.
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 300 & \text { every 6 months } & 7 & 10 & \_\_\_\_\_\_\_\_ &\_\_\_\_\_\_\_\_
\end{array}
$$

Breanna Ollech
Breanna Ollech
Numerade Educator
01:05

Problem 2

Note: Round to the nearest cent when necessary.
Use Table 12-1 to calculate the future value of the following ordinary annuities.
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{l}
\text { Nominal } \\
\text { Rate (\%) }
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 2,500 & \text { every } 6 \text { months } & 5 & 10 &\_\_\_\_\_\_\_\_& \_\_\_\_\_\_\_\_
\end{array}
$$

Breanna Ollech
Breanna Ollech
Numerade Educator

Problem 2

For the following sinking funds, use Table 12-1 to calculate the amount of the periodic payments needed to amount to the financial objective (future value of the annuity).
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Sinking Fund } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { (Objective) }
\end{array} \\
\hline \text\_\_\_\ & \text { every year } & 14 & 9 & \text { annually } & \$ 250,000
\end{array}
$$

Check back soon!

Problem 2

Note: Round to the nearest cent when necessary.
Use Table 12-2 to calculate the present value of the following ordinary annuities.
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 2,000 & \text { every year } & 20 & 7 & \_\_\_\_\_\_\_\_&\_\_\_\_\_\_\_\_\\
\end{array}
$$

Check back soon!
01:05

Problem 3

Note: Round to the nearest cent when necessary.
Use Table 12-1 to calculate the future value of the following ordinary annuities.
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{l}
\text { Nominal } \\
\text { Rate (\%) }
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 10,000 & \text { every } \text { year } & 10 & 9 & \_\_\_\_\_\_\_\_ & \ \_\_\_\_\_\_\_\_
\end{array}
$$

Breanna Ollech
Breanna Ollech
Numerade Educator
01:05

Problem 3

For the following sinking funds, use Table 12-1 to calculate the amount of the periodic payments needed to amount to the financial objective (future value of the annuity).
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Sinking Fund } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { (Objective) }
\end{array} \\
\hline \text\_\_\_\ & \text { every 3 month } & 5 & 12 & \text { quarterly } & \$ 1,500
\end{array}
$$

Breanna Ollech
Breanna Ollech
Numerade Educator
01:05

Problem 3

Note: Round to the nearest cent when necessary.
Use Table 12-2 to calculate the present value of the following ordinary annuities.
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 1,600 & \text { every 3 month } & 6 & 12 & \_\_\_\_\_\_\_\_ &\_\_\_\_\_\_\_\_ \\
\end{array}
$$

Breanna Ollech
Breanna Ollech
Numerade Educator

Problem 4

For the following sinking funds, use Table 12-1 to calculate the amount of the periodic payments needed to amount to the financial objective (future value of the annuity).
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Sinking Fund } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { (Objective) }
\end{array} \\
\hline \text\_\_\_\ & \text { every month } & 1 \frac{1}{2} & 12 & \text {monthly } & \$ 4,000
\end{array}
$$

Check back soon!
01:05

Problem 4

Note: Round to the nearest cent when necessary.
Use Table 12-1 to calculate the future value of the following ordinary annuities.
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{l}
\text { Nominal } \\
\text { Rate (\%) }
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 200 & \text { every } \text { month } & 2 & 12 & \_\_\_\_\_\_\_\_ &\_\_\_\_\_\_\_\_
\end{array}
$$

Breanna Ollech
Breanna Ollech
Numerade Educator
01:05

Problem 4

Note: Round to the nearest cent when necessary.
Use Table 12-2 to calculate the present value of the following ordinary annuities.
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 1,000 & \text { every month } & 1 \frac{3}{4} & 6 & \_\_\_\_\_\_\_\_ & \_\_\_\_\_\_\_\_\\
\end{array}
$$

Breanna Ollech
Breanna Ollech
Numerade Educator

Problem 5

For the following sinking funds, use Table 12-1 to calculate the amount of the periodic payments needed to amount to the financial objective (future value of the annuity).
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Sinking Fund } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { (Objective) }
\end{array} \\
\hline \text\_\_\_\ & \text { every 3 month } & 4 & 16 & \text {quarterly } & \$ 18,750
\end{array}
$$

Check back soon!
01:05

Problem 5

Note: Round to the nearest cent when necessary.
Use Table 12-1 to calculate the future value of the following ordinary annuities.
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{l}
\text { Nominal } \\
\text { Rate (\%) }
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 1,500 & \text { every } 3 \text { months } & 7 & 16 & \_\_\_\_\_\_\_\_& \_\_\_\_\_\_\_\_
\end{array}
$$

Breanna Ollech
Breanna Ollech
Numerade Educator

Problem 5

Note: Round to the nearest cent when necessary.
Use Table 12-2 to calculate the present value of the following ordinary annuities.
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 8,500 & \text { every 3 month } & 3 & 16 & \_\_\_\_\_\_\_\_&\_\_\_\_\_\_\_\_ \\
\end{array}
$$

Check back soon!

Problem 6

Note: Round to the nearest cent when necessary.
Use Table 12-2 to calculate the present value of the following annuities due.
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 1,400 & \text { every year } & 10 & 11 & \_\_\_\_\_\_\_\_ &\_\_\_\_\_\_\_\_ \\
\hline
\end{array}
$$

Check back soon!
01:05

Problem 6

Note: Round to the nearest cent when necessary.
Use Table 12-1 to calculate the future value of the following annuities due.
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 400 & \text { every 6 months } & 12 & 10 & \_\_\_\_\_\_\_\_ & \_\_\_\_\_\_\_\_
\end{array}
$$

Breanna Ollech
Breanna Ollech
Numerade Educator
06:00

Problem 6

You have just been hired as a loan officer at the Eagle National Bank. Your first assignment is to calculate the amount of the periodic payment required to amortize (pay off) the following loans being considered by the bank (use Table 12-2).
$$
\begin{array}{ccccc}
\begin{array}{c}
\text { Loan } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Period }
\end{array} & \begin{array}{c}
\text { Term of } \\
\text { Loan (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { (Amount of Loan) }
\end{array} \\
\hline\_\_\_\ \_\_\_\ & \text { every year } & 12 & 9 & \$ 30,000
\end{array}
$$

Charles Carter
Charles Carter
Numerade Educator

Problem 7

Note: Round to the nearest cent when necessary.
Use Table 12-2 to calculate the present value of the following annuities due.
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 1,300 & \text { every 3 months } & 4 & 12 & \_\_\_\_\_\_\_\_ & \_\_\_\_\_\_\_\_\ \\
\hline
\end{array}
$$

Check back soon!
01:05

Problem 7

Note: Round to the nearest cent when necessary.
Use Table 12-1 to calculate the future value of the following annuities due.
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 1,000 & \text { every 3 months } & 3 & 8 & \_\_\_\_\_\_\_\_ &\_\_\_\_\_\_\_\_ \\
\end{array}
$$

Breanna Ollech
Breanna Ollech
Numerade Educator

Problem 7

You have just been hired as a loan officer at the Eagle National Bank. Your first assignment is to calculate the amount of the periodic payment required to amortize (pay off) the following loans being considered by the bank (use Table 12-2).
$$
\begin{array}{ccccc}
\begin{array}{c}
\text { Loan } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Period }
\end{array} & \begin{array}{c}
\text { Term of } \\
\text { Loan (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { (Amount of Loan) }
\end{array} \\
\hline \text\_\_\_\ & \text { every 3 month } & 5& 8 & \$ 5,500
\end{array}
$$

Check back soon!

Problem 7

You have just been hired as a loan officer at the Eagle National Bank. Your first assignment is to calculate the amount of the periodic payment required to amortize (pay off) the following loans being considered by the bank (use Table 12-2).
$$
\begin{array}{ccccc}
\begin{array}{c}
\text { Loan } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Period }
\end{array} & \begin{array}{c}
\text { Term of } \\
\text { Loan (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { (Amount of Loan) }
\end{array} \\
\hline \text\_\_\_\ & \text { every 3 month } & 5& 8 & \$ 5,500
\end{array}
$$

Check back soon!

Problem 8

Note: Round to the nearest cent when necessary.
Use Table 12-2 to calculate the present value of the following annuities due.
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 500 & \text { every months } & 2 \frac{1}{4}& 18 & \text { monthly } & \_\_\_\_\_\_\_\_\ \\
\hline
\end{array}
$$

Check back soon!
01:05

Problem 8

Note: Round to the nearest cent when necessary.
Use Table 12-1 to calculate the future value of the following annuities due.
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 50& \text { every month } & 2 \frac{1}{2} & 18 & \_\_\_\_\_\_\_\_ & \_\_\_\_\_\_\_\_\\
\end{array}
$$

Breanna Ollech
Breanna Ollech
Numerade Educator

Problem 8

You have just been hired as a loan officer at the Eagle National Bank. Your first assignment is to calculate the amount of the periodic payment required to amortize (pay off) the following loans being considered by the bank (use Table 12-2).
$$
\begin{array}{ccccc}
\begin{array}{c}
\text { Loan } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Period }
\end{array} & \begin{array}{c}
\text { Term of } \\
\text { Loan (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { (Amount of Loan) }
\end{array} \\
\hline \text\_\_\_\ & \text { every month } & 1 \frac{3}{4}& 18 & \$ 10,000
\end{array}
$$

Check back soon!
06:00

Problem 9

You have just been hired as a loan officer at the Eagle National Bank. Your first assignment is to calculate the amount of the periodic payment required to amortize (pay off) the following loans being considered by the bank (use Table 12-2).
$$
\begin{array}{ccccc}
\begin{array}{c}
\text { Loan } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Period }
\end{array} & \begin{array}{c}
\text { Term of } \\
\text { Loan (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { (Amount of Loan) }
\end{array} \\
\hline \text\_\_\_\ & \text { every 6 month } & 8& 6 & \$ 13,660
\end{array}
$$

Charles Carter
Charles Carter
Numerade Educator
01:05

Problem 9

Use Table 12-1 to calculate the future value of the following annuities due.
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 2,00& \text { every year } & 25 & 5 & \_\_\_\_\_\_\_\_ &\_\_\_\_\_\_\_\_ \\
\end{array}
$$

Breanna Ollech
Breanna Ollech
Numerade Educator

Problem 9

Note: Round to the nearest cent when necessary.
Use Table 12-2 to calculate the present value of the following annuities due.
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 7,000 & \text { every 6 months } & 12& 8 & \text {semiannually } & \_\_\_\_\_\_\_\_\ \\
\hline
\end{array}
$$

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Problem 10

Note: Round to the nearest cent when necessary.
Use Table 12-2 to calculate the present value of the following annuities due.
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 4,000 & \text { every year } & 18& 7 & \text {annually } &\_\_\_\_\_\_\_\_\ \\
\hline
\end{array}
$$

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01:05

Problem 10

Note: Round to the nearest cent when necessary.
Use Table 12-1 to calculate the future value of the following annuities due.
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 4,400& \text { every 6 month } & 8 & 6 & \_\_\_\_\_\_\_\_ &\_\_\_\_\_\_\_\_ \\
\end{array}
$$

Breanna Ollech
Breanna Ollech
Numerade Educator

Problem 10

You have just been hired as a loan officer at the Eagle National Bank. Your first assignment is to calculate the amount of the periodic payment required to amortize (pay off) the following loans being considered by the bank (use Table 12-2).
$$
\begin{array}{ccccc}
\begin{array}{c}
\text { Loan } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Period }
\end{array} & \begin{array}{c}
\text { Term of } \\
\text { Loan (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { (Amount of Loan) }
\end{array} \\
\hline \text\_\_\_\ & \text { every month } & 1.5& 12 & \$ 850
\end{array}
$$

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01:42

Problem 11

Solve the following exercises by using tables.
Everest Industries established a sinking fund to pay off a $$\$ 10,000,000$$ loan that comes due in 8 years for a corporate yacht.
a. What equal payments must be deposited into the fund every 3 months at $6 \%$ interest compounded quarterly for Everest to meet this financial obligation?
b. What is the total amount of interest earned in this sinking fund account?

Matt Just
Matt Just
Numerade Educator

Problem 11

Solve the following exercises by using Table 12-2.
Diamond Savings & Loan is paying $6 \%$ interest compounded monthly. How much must be deposited now to withdraw an annuity of $$\$ 400$$ at the end of each month for 2 years?

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Problem 11

Solve the following exercises by using Table 12-1.
Paragon Savings & Loan is paying $6 \%$ interest compounded monthly. How much will $$\$ 100$$ deposited at the end of each month be worth after 2 years?

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03:27

Problem 12

Solve the following exercises by using tables.
Jennifer Kaufman bought a used Toyota Prius for $$\$ 15,500$$. She made a $$\$ 2,500$$ down payment and is financing the balance at Imperial Bank over a 3-year period at $12 \%$ interest. As her banker, calculate what equal monthly payments will be required by Jennifer to amortize the car loan.

Celine Ibrahim
Celine Ibrahim
Numerade Educator

Problem 12

Solve the following exercises by using Table 12-1.
Suntech Distributors, Inc., deposits $$\$ 5,000$$ at the beginning of each 3-month period for 6 years in an account paying $8 \%$ interest compounded quarterly.
a. How much will be in the account at the end of the 6-year period?
b. What is the total amount of interest earned in this account?

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Problem 12

Solve the following exercises by using Table 12-2.
Jami Minard wants to receive an annuity of $$\$ 2,000$$ at the beginning of each year for the next 10 years. How much should be deposited now at $6 \%$ compounded annually to accomplish this goal?

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01:00

Problem 13

Solve the following exercises by using tables.
Green Thumb Landscaping buys new lawn equipment every 3 years. It is estimated that $$\$ 25,000$$ will be needed for the next purchase. The company sets up a sinking fund to save for this obligation.
a. What equal payments must be deposited every 6 months if interest is $8 \%$ compounded semiannually?
b. What is the total amount of interest earned by the sinking fund?

Tony Ni
Tony Ni
Numerade Educator
View

Problem 13

Solve the following exercises by using Table 12-1.
Dana Phipps deposits $$\$ 85$$ each payday into an account at $12 \%$ interest compounded monthly. She gets paid on the last day of each month. How much will her account be worth at the end of 30 months?

Donna Densmore
Donna Densmore
Numerade Educator

Problem 13

Solve the following exercises by using Table 12-2.
As the chief accountant for Proline Industries, you have estimated that the company must pay $$\$ 100,000$$ income tax to the IRS at the end of each quarter this year. How much should be deposited now at $8 \%$ interest compounded quarterly to meet this tax obligation?

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01:03

Problem 14

Solve the following exercises by using tables.
Paul and Donna Kelsch are planning a Mediterranean cruise in 4 years and will need $$\$ 7,500$$ for the trip. They decide to set up a "sinking fund" savings account for the vacation. They intend to make regular payments at the end of each 3-month period into the account that pays $6 \%$ interest compounded quarterly. What periodic sinking fund payment will allow them to achieve their vacation goal?

Tyler Moulton
Tyler Moulton
Numerade Educator
00:59

Problem 14

Solve the following exercises by using Table 12-2.
Ron Sample is the grand prize winner in a college tuition essay contest awarded through a local organization's scholarship fund. The winner receives $$\$ 2,000$$ at the beginning of each year for the next 4 years. How much should be invested at $7 \%$ interest compounded annually to award the prize?

Madysn Cardinal
Madysn Cardinal
Numerade Educator

Problem 14

Solve the following exercises by using Table 12-1.
Jorge Otero has set up an annuity due with the United Credit Union. Each month $$\$ 170$$ is electronically debited from his checking account and placed into a savings account earning $6 \%$ interest compounded monthly. What is the value of Jorge's account after 18 months?

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03:38

Problem 15

Solve the following exercises by using tables.
Valerie Ross is ready to retire and has saved $$\$ 200,000$$ for that purpose. She wants to amortize (liquidate) that amount in a retirement fund so that she will receive equal annual payments over the next 25 years. At the end of the 25 years, no funds will be left in the account. If the fund earns $4 \%$ interest, how much will Valerie receive each year?

Liuxi Sun
Liuxi Sun
Numerade Educator
03:04

Problem 15

Solve the following exercises by using Table 12-2.
Silver Tip Golf Course management has contracted to pay a golf green maintenance specialist a $$\$ 680$$ monthly fee at the end of each month to provide advice on improving the quality of the greens on its 18-hole course. How much should be deposited now into an account that earns $6 \%$ compounded monthly to be able to make monthly payments to the consultant for the next year?

Liuxi Sun
Liuxi Sun
Numerade Educator
05:23

Problem 15

Solve the following exercises by using Table 12-1.
When Ben Taylor was born, his parents began depositing $$\$ 500$$ at the beginning of every year into an annuity to save for his college education. If the account paid $7 \%$ interest compounded annually for the first 10 years and then dropped to $5 \%$ for the next 8 years, how much is the account worth now that Ben is 18 years old and ready for college?

Yujie Wang
Yujie Wang
College of San Mateo

Problem 16

Solve the following exercises by using the sinking fund or amortization formula.
Sinking fund payment
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Sinking Fund } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (yrs) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate (\%) }
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { (Objective) }
\end{array} \\
\hline \_\_\_\ & \text { every 3 months } & 5 & 6.0 & \text { quarterly } & \$ 8,000 \\
\hline
\end{array}
$$

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Problem 16

Solve the following exercises by using Table 12-2.
Analysts at Sky West Airlines did a 3-year projection of expenses. They calculated that the company will need $$\$ 15,800$$ at the beginning of each 6-month period to buy fuel, oil, lube, and parts for aircraft operations and maintenance. Sky West can get $6 \%$ interest compounded semiannually from its bank. How much should Sky West deposit now to support the next 3 years of operations and maintenance expenses?

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View

Problem 16

Solve the following exercises by using formulas.
Ordinary Annuities
$$
\begin{array}{cccccc}
\begin{array}{l}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 2,000 & \text { every 6 months } & 3 & 3.0 &\_\_\_\_\_\_\_\_&\_\_\_\_\_\_\_\_ \\
\hline
\end{array}
$$

Danielle Fairburn
Danielle Fairburn
Numerade Educator

Problem 17

Solve the following exercises by using the sinking fund or amortization formula.
Sinking fund payment
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Sinking Fund } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (yrs) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate (\%) }
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { (Objective) }
\end{array} \\
\hline \text\_\_\_\ & \text { every months } & 8 & 1.5 & \text { monthly} & \$ 5,550 \\
\hline
\end{array}
$$

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02:41

Problem 17

Solve the following exercises by using formulas.
Present value of an ordinary annuity
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (yrs) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 500 & \text { every } 3 \text { months } & 3 \frac{1}{4} & 6.0 & \text { quarterly } & \_\_\_\_\_\_\_\_ \\
\hline
\end{array}
$$

Willis James
Willis James
Numerade Educator
00:41

Problem 17

Solve the following exercises by using formulas.
Ordinary Annuities
$$
\begin{array}{cccccc}
\begin{array}{l}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 300 & \text { every months } & 3 & 6.0 & \_\_\_\_\_\_\_\_& \_\_\_\_\_\_\_\_\ \\
\hline
\end{array}
$$

Sam Limsuwannarot
Sam Limsuwannarot
Numerade Educator
01:34

Problem 18

Solve the following exercises by using formulas.
Present value of an ordinary annuity
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (yrs) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 280 & \text { every } \text { months } & 5 & 3.0 & \text { monthly } & \_\_\_\_\_\_\_\_\ \\
\hline
\end{array}
$$

Sam Limsuwannarot
Sam Limsuwannarot
Numerade Educator
01:52

Problem 18

Solve the following exercises by using the sinking fund or amortization formula.
Sinking fund payment
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Sinking Fund } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (yrs) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate (\%) }
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { (Objective) }
\end{array} \\
\hline \text\_\_\_\ & \text { every 6 months } & 3 \frac{1}{2} & 4.0 & \text { semiannually} & \$ 1,900 \\
\hline
\end{array}
$$

Charles Carter
Charles Carter
Numerade Educator

Problem 18

Solve the following exercises by using formulas.
Ordinary Annuities
$$
\begin{array}{cccccc}
\begin{array}{l}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 1,800 & \text { every 3 months } & 3 \frac{1}{2} & 4.0 & \_\_\_\_\_\_\_\_ & \_\_\_\_\_\_\_\_\ \\
\hline
\end{array}
$$

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01:34

Problem 19

Solve the following exercises by using formulas.
Present value of an ordinary annuity
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (yrs) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 950 & \text { every } \text { year } & 8 & 2.9 & \text { annually } & \_\_\_\_\_\_\_\_\ \\
\hline
\end{array}
$$

Sam Limsuwannarot
Sam Limsuwannarot
Numerade Educator

Problem 19

Solve the following exercises by using the sinking fund or amortization formula.
Amortization payment
$$
\begin{array}{ccccc}
\begin{array}{c}
\text { Loan } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (yrs) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { (Amount of Loan) }
\end{array} \\
\hline \_\_\_\ & \text { every year } & 10 & 10.6 & \$ 22,500
\end{array}
$$

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02:00

Problem 19

Solve the following exercises by using formulas.
Annuities Due
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate (\%) }
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 675 & \text { every month } & 5 & 1.5 & \_\_\_\_\_\_\_\_& \_\_\_\_\_\_\_\_
\end{array}
$$

AG
Ankit Gupta
Numerade Educator
02:54

Problem 20

Solve the following exercises by using the sinking fund or amortization formula.
Amortization payment
$$
\begin{array}{ccccc}
\begin{array}{c}
\text { Loan } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (yrs) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { (Amount of Loan) }
\end{array} \\
\hline\text\_\_\_\ & \text { every 3 month} & 4 & 8.8 & \$ 9,000
\end{array}
$$

AG
Ankit Gupta
Numerade Educator
04:04

Problem 20

Solve the following exercises by using formulas.
Present value of an annuity due
$$
\begin{array}{lccccc}
\begin{array}{l}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (yrs) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 1,100 & \text { every year } & 5 & 5.8 & \text { annually } &\_\_\_\_\_\_\_\_
\end{array}
$$

Niamat Khuda
Niamat Khuda
Numerade Educator
01:38

Problem 20

Solve the following exercises by using formulas.
Annuities Due
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate (\%) }
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 4,800 & \text { every 3 month } & 3 & 6.0 & \_\_\_\_\_\_\_\_ & \_\_\_\_\_\_\_\_\\
\end{array}
$$

Charles Carter
Charles Carter
Numerade Educator
03:39

Problem 21

Solve the following exercises by using formulas.
Annuities Due
$$
\begin{array}{cccccc}
\begin{array}{c}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (years) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate (\%) }
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Future Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 7,000 & \text { every year } & 10 & 3.2 & \_\_\_\_\_\_\_\_ & \_\_\_\_\_\_\_\_\\
\end{array}
$$

Charles Carter
Charles Carter
Numerade Educator

Problem 21

Solve the following exercises by using the sinking fund or amortization formula.
Amortization payment
$$
\begin{array}{ccccc}
\begin{array}{c}
\text { Loan } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (yrs) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { (Amount of Loan) }
\end{array} \\
\hline\text\_\_\_\ & \text { every month} & 6 & 9.0 & \$ 4,380
\end{array}
$$

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Problem 21

Solve the following exercises by using formulas.
Present value of an annuity due
$$
\begin{array}{lccccc}
\begin{array}{l}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (yrs) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 425 & \text { every month } & 4 \frac{3}{4} & 4.5 & \text { monthly } &\_\_\_\_\_\_\_\_\\
\end{array}
$$

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01:01

Problem 22

Solve the following exercises by using formulas.
Present value of an annuity due
$$
\begin{array}{lccccc}
\begin{array}{l}
\text { Annuity } \\
\text { Payment }
\end{array} & \begin{array}{c}
\text { Payment } \\
\text { Frequency }
\end{array} & \begin{array}{c}
\text { Time } \\
\text { Period (yrs) }
\end{array} & \begin{array}{c}
\text { Nominal } \\
\text { Rate }(\%)
\end{array} & \begin{array}{c}
\text { Interest } \\
\text { Compounded }
\end{array} & \begin{array}{c}
\text { Present Value } \\
\text { of the Annuity }
\end{array} \\
\hline \$ 700 & \text { every 6 month } & 7 & 3.6 & \text { semiannually } & \_\_\_\_\_\_\_\_\\
\end{array}
$$

Sam Limsuwannarot
Sam Limsuwannarot
Numerade Educator
01:48

Problem 22

Turnberry Manufacturing has determined that it will need $$\$ 500,000$$ in 8 years for a new roof on its southeastern regional warehouse. A sinking fund is established for the roof at $3.4 \%$ compounded semiannually. What equal payments are required every 6 months to accumulate the needed funds for the roof?

Jessica Bisagno
Jessica Bisagno
Numerade Educator
01:37

Problem 22

To establish a "rainy day" cash reserve account, Bonanza Industries deposits $$\$ 10,000$$ of its profit at the end of each quarter into a money market account that pays $1.75 \%$ interest compounded quarterly.
a. How much will the account be worth in 3 years?
b. How much will the account be worth in $4 \frac{1}{2}$ years?

Nick Johnson
Nick Johnson
Numerade Educator
02:41

Problem 23

As part of an inheritance, Joan Townsend will receive an annuity of $$\$ 1,500$$ at the end of each month for the next 6 years. What is the present value of this inheritance at a rate of $2.4 \%$ interest compounded monthly?

Willis James
Willis James
Numerade Educator
01:37

Problem 23

As a part of his retirement planning strategy, Mark Woodson deposits $$\$ 125$$ each payday into an investment account at $3 \%$ interest compounded monthly. Mark gets paid on the first day of each month.
a. How much will his account be worth in 5 years?
b. How much will his account be worth in 15 years?

Nick Johnson
Nick Johnson
Numerade Educator
02:23

Problem 23

Randy Scott purchased a motorcycle for $$\$ 8,500$$ with a loan amortized over 5 years at $7.2 \%$ interest. What equal monthly payments are required to amortize this loan?

Mukesh Devi
Mukesh Devi
Numerade Educator
View

Problem 24

Norm Legend has been awarded a scholarship from Canmore College. For the next 4 years, he will receive $$\$ 3,500$$ for tuition and books at the beginning of each quarter. How much must the school set aside now in an account earning $3 \%$ interest compounded quarterly to pay Norm's scholarship?

Luis Garcia
Luis Garcia
Numerade Educator
02:02

Problem 24

Hi-Tech Hardware has been in business for a few years and is doing well. The owner has decided to save for a future expansion to a second location. He invests $$\$ 1,000$$ at the end of every month at $12 \%$ interest compounded monthly.
a. How much will be available for the second store after $2 \frac{1}{2}$ years?
b. How much would be in the account if the owner saved for 5 years?
c. How much would be in the account after 5 years if it had been an annuity due?

AG
Ankit Gupta
Numerade Educator
06:41

Problem 24

Betty Price purchased a new home for $$\$ 225,000$$ with a $20 \%$ down payment and the remainder amortized over a 15 -year period at $9 \%$ interest.
a. What amount did Betty finance?
b. What equal monthly payments are required to amortize this loan over 15 years?
c. What equal monthly payments are required if Betty decides to take a 20-year loan rather than a 15 -year loan?

Zach Steedman
Zach Steedman
Numerade Educator
05:54

Problem 25

Apollo Enterprises has been awarded an insurance settlement of $$\$ 5,000$$ at the end of each 6-month period for the next 10 years.
a. As the accountant, calculate how much the insurance company must set aside now at $6 \%$ interest compounded semiannually to pay this obligation to Apollo.
b. How much would the insurance company have to invest now if the Apollo settlement was changed to $$\$ 2,500$$ at the end of each 3-month period for 10 years and the insurance company earned $8 \%$ interest compounded quarterly?
c. How much would the insurance company have to invest now if the Apollo settlement was paid at the beginning of each 3-month period rather than at the end?

Amy Jiang
Amy Jiang
Numerade Educator
01:25

Problem 25

As part of your retirement plan, you have decided to deposit $$\$ 3,000$$ at the beginning of each year into an account paying $5 \%$ interest compounded annually.
a. How much would the account be worth after 10 years?
b. How much would the account be worth after 20 years?
c. When you retire in 30 years, what will be the total worth of the account?
d. If you found a bank that paid $6 \%$ interest compounded annually rather than $5 \%$, how much would you have in the account after 30 years?
e. (Optional) Use the future value of an annuity due formula to calculate how much you would have in the account after 30 years if the bank in part d switched from annual compounding to monthly compounding and you deposited $$\$ 250$$ at the beginning of each month instead of $$\$ 3,000$$ at the beginning of each year.

Nick Johnson
Nick Johnson
Numerade Educator
02:52

Problem 25

The Shangri-La Hotel has a financial obligation of $$\$ 1,000,000$$ due in 5 years for kitchen equipment. A sinking fund is established to meet this obligation at $7.5 \%$ interest compounded monthly.
a. What equal monthly sinking fund payments are required to accumulate the needed amount?
b. What is the total amount of interest earned in the account?

Angela Guo
Angela Guo
Numerade Educator
04:46

Problem 26

You are the vice president of finance for Neptune Enterprises, Inc., a manufacturer of scuba diving gear. The company is planning a major plant expansion in 5 years. You have decided to start a sinking fund to accumulate the funds necessary for the project. Current bank rates are $8 \%$ compounded quarterly. It is estimated that $$\$ 2,000,000$$ in today's dollars will be required; however, the inflation rate on construction costs and plant equipment is expected to average $5 \%$ per year for the next 5 years.
a. Use the compound interest concept from Chapter 11 to determine how much will be required for the project, taking inflation into account.
b. What sinking fund payments will be required at the end of every 3-month period to accumulate the necessary funds?

Matt Just
Matt Just
Numerade Educator