Exercises: Annuities

Question 1 Which of the following best describes an annuity? O Deposits are made at random (whenever you have extra money) into an account earning interest. O A lump sum is deposited into an account earning simple interest. O Equal, regular deposits are made into an account earning interest. O A lump sum is deposited into an account earning compound interest.@ Question 10 You want to buy a $257,000 home. You plan to pay 10% as a down payment, and take out 3 30 year loan for the rast. 3) How much is the loan amount going to be? (Round to the nearest cent.) o) What will yvour monthly payments be if the interest rate is 647 (Round to the nearest cent.) ) What will your monthly payments be if the interest rate is 7%7 (Round to the nearest cent.) @ Qusstion 11 Suppose you want to buy 3 $157,000 home. You found a bank that offers 3 30-year loan at 6.5% APR. What will be your monthly payment? (Round to the nearest cent.) How much wiould you end up paying the bank for the home after 30 years? (Round to the nearest cent.) Suppose you wanted to reduce the time of your loan to 25 years. What would be your naw monthly payment? (Round to the nearest cent.) How much would you end up paying the bank for the home after 25 years? (Round to the nearest cent.) How much did you save by reducing the time of your mortgage loan? (Round to the nearest cant.) Question 12 After making 28 payments of $510.75 on your original 5 year 527000 car loan at 5.1% compounded manthly you want to find the amount that remains. What is the amount of the remaining balance of your car loan? (Round balance to the nearest cent.) The remaining balance of your car loan would be 5 Question 13 Dwayne and Bella take out 2 30 year mortgage for 32858,000 at the APR of 10.6%, compounded monthly. (3) What will their monthly payments be? (Round balance to the nearest cent.) (k) After they had made 2 years of the payments (108 payments) they decide to refinance the remaining loan balance. What is the balance remaining on the original loan of 32588,0007 (Round balance to the nearest cant.) Question 2 You deposit $300 each month into an account earning 26 interest compounded monthly. 3) How much will you have in the account in 15 years? (Round to the nearest cent.) b) How much total money will you put into the account? (Round to the nearest cent.) () How much total interest will you earn? (Round to the nearest cent.)@ Question 3 You deposit $5000 each year into an account earning 8% interest compounded annually. How much will you have in the account in 33 years? (Round to the nearest cent.) Question 4 Suppose you want to have $700,000 for retirement in 35 years. Your account earns 5% interest. 3) How much would you need to deposit in the account each month? (Round to the nearest cent.) b) How much interest will you earn? (Round to the nearest cent.)Question 5 Suppose you want to have $300,000 for retirement in 30 years. Your account earns 9% interest. a) How much would you need to deposit in the account each month? (Round to the nearest cent.) b) How much interest will you earn? (Round to the nearest cent.) () Suppose you waited 10 years to invest in the same retirement fund and have the same $300,000 for retirement at the same 9% interest. What amount will you have to deposit each month to match the value of your annuity? (Round to the nearest cent.)Question 6 You have $300,000 saved for retirement. Your account earns 10% interest. How much will you be able to pull out each month, if you want to be able to take withdrawals for 25 years? (Round to the nearest cent.) CQusstion 7 You want to be able to withdraw 535,000 each year for 15 years. Your account earns 5% interest. a) How much do you need in your account at the beginning? (Round to the nearest cent.) o) How much total money will you pull out of the account? (Round to the nearest cent.) ) How much of that money is interest? (Round to the nearest cent.) Question 8 You want to buy a $12,000 car. The company is offering a 29% interest rate for 60 months (5 years). What will your monthly payments be? (Round to the nearest cent.)Question 9 You can afford a $1500 per month mortgage payment. You've found a 30 year loan at 7% interest. 3) How big of a loan can you afford? (Round to the nearest cent.) b) How much total money will you pay the loan company? (Round to the nearest cent.) c) How much of that money is interest? (Round to the nearest cent.)