Question 1

Alfredo has two offers for his grocery shop. The first offer is a cash payment of $60,000, and the second is a down payment of $10,000 with payments of $6,000 at the end of each semiannual period for 5 years. Assuming an interest rate of 6% compounded semiannually, find the difference between the two present values. State the answer as an absolute value.

		$1,181.22
		$11,181.22
		$18,783.28
		$51,181.22

Question 2

Mrs. Black plans to retire at age 40 and wants to withdraw $20,000 every 6 months until she is 90. If her money earns 10% compounded semi-annually, how much will she need in her account when she turns 40 to cover her anticipated needs through the age of 90?

		$199,985.40
		$365,118.40
		$396,958.40
		$8,650,973.08

Question 3

After the Tsunami in south Asia, an international disaster relief organization agreed to help fund hospitals in a small city which lost everything with a payment of $10,000 every month for 4 years assuming an interest of 12% compounded monthly. What is this annuity worth today?

		$39,019.66
		$40,604.01
		$379,739.59
		$468,433.53

Question 4

How much money deposited today would be the same as equal payments of $5,000 at the end of each quarter for 10 years at 6.4% compounded quarterly?

	a.	$1,483.46
	b.	$3,368.64
	c.	$71,591.82
	d.	$146,884.22

Question 5

The court ruled that Carson Corporation was liable in the death of an employee. The settlement called for the company to pay the employee's son $30,000 at the end of each half year for 15 years. If the company wishes to pay off this liability in one lump sum, and if both parties can agree on an interest rate of 6% compounded semiannually, what is this settlement worth today?

		$291,367.47
		$358,138.05
		$412,944.93
		$588,013.24

Question 6

Jonathan Mumper wants to build up an emergency fund for unexpected expenses in his electronic shop. He deposits $200 at the end of each month for 10 years into a mutual fund that he believes will yield 7.2% compounded monthly. Find the equivalent lump sum amount that would have to be deposited today at 7.2% interest compounded monthly to generate the same value as that of the annuity after 10 years.

		$1,935.55
		$17,073.31
		$24,000.00
		$35,000.60

Question 7

Franklin High School sets aside a monthly payment of $5,000 for 4 years so they will have funds to remodel some of its classrooms. Assuming an interest rate environment of 5.2% compounded monthly, what lump sum deposited today would result in the same balance as that of the annuity after 4 years.

		$17,647.70
		$19,785.20
		$87,716.40
		$216,262.96

Question 8

Walter won a law suit and was awarded $270,000. The losing party agreed to pay the amount in equal payments at the end of each quarter for 5 years with an interest of 10% compounded quarterly. How much will Walter receive each quarter?

		$4,191.84
		$17,319.68
		$31,714.11
		$68,287.35

Question 9

A beverage company hires a manager to work in China. The contract states that if the manager works there for 3 years she will receive an extra bonus of $ 5,000 at the end of each quarter for 6 years following her assignment. Find the lump sum that would have to be deposited today to equal the ending value of the annuity after 6 years assuming money can earn 5.2% interest compounded quarterly.

		$25,216.94
		$28,680.97
		$102,517.09
		$228,443.09

Question 10

Katie Leoung was in a car accident and needs $2,800 per month to live on for the next 2 years. Assuming money can earn 10% compounded monthly, what is this annuity worth today?

		$5,530.77
		$5,599.94
		$60,678.39
		$74,051.36