1. Find i (the rate per period) and n (the number of periods) for the following
ID: 3142231 • Letter: 1
Question
1. Find i (the rate per period) and n (the number of periods) for the following annuity. Quarterly deposits of $800 are made for 4 years into an annuity that pays 8.5% compounded quarterly.
2.find i (the rate per period) and n (the number of periods) for the following annuity. Monthly deposits of $285 are made for 9 years into an annuity that pays 5.5% compounded monthly.
3.Use the future value formula to find the indicated value. n=38; i = 0.03; PMT =$ 79 ; FV equals ?
4.Use the future value formula to find the indicated value. FV=9,000 i=0.03 ; PMT=$600; n= ?
5.Recently, More Money 4U offered an annuity that pays 6.0% compounded monthly. If $2,055 is deposited into this annuity every month, how much is in the account after 11 years? How much of this is interest?
6.Acme Annuities recently offered an annuity that pays 3.9% compounded monthly. What equal monthly deposit should be made into this annuity in order to have $113,000 in 13years?
7.You can afford monthly deposits of $180 into an account that pays 3.0% compounded monthly. How long will it be until you have $7,500 to buy a boat?
8.Use graphical approximation techniques or an equation solver to approximate the desired interest rate. A person makes annual payments of $1000 into an ordinary annuity. At the end of 55 years, the amount in the annuity is $5891.22. What annual nominal compounding rate has this annuity earned?
Explanation / Answer
Solution:
Quarterly deposits of $800
Payment = $800
It is made for 4 years into an annuity that pays 8.5% compounded quarterly
time t = 4 year
rate = 8.5 % = 0.085 compunded quaterly
therefore number of period = 4
effective rate per period i = r/n = 0.085/4 = 0.02125
Total number period of payment = 4x4 = 16
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