1. $111,834 is the amount of an ordinary ammunity of $6,000 for 4 years at 8% compounded quarterly. (Points: 2)
True
False
2. The monthly payment of rent is an example of a renter's annuity. (Points: 2)
True
False
3. A contingent annuity has a specific number of payment periods. (Points: 2)
True
False
4. An annuity with payments made at the end of each period is called an ordinary annuity. (Points: 2)
True
False
5. With an annuity due no interest is paid in the first period. (Points: 2)
True
False
6. The amount of an $8,000.00, 10%, 5 year ordinary annuity compounded semiannually is $100,624. (Points: 2)
True
False
7. The amount of interest on an ordinary annuity of $11,600.00 for 5 years at 8% compounded semiannually is $32,269.00. (Points: 2)
True
False
8. The maturity value of a transaction is equal to the principal plus the rate. (Points: 2)
True
False
9. The deposits or payments are made at the end of the period in ordinary annuities. (Points: 2)
True
False
10. John owns five health food stores in the Columbia area, and they are realizing a good profit. John decides to invest a portion of the profits in an annuity offered by Penn Life Insurance. Penn Life will guarantee John 8% interest compounded quarterly for the first 5 years, as long as he deposits $10,000.00 every quarter of the term of the guaranteed rate. Assuming John fulfills the obligations of the investment, what will be the value of the investment at the end of the 5 year term? (Points: 2)
$261,832.74
$245,446.58
$242,970.00
$255,446.40
none of the above
11. An annuity without a specific number of payment periods is termed a
: (Points: 2)
non-standard annuity
annual annuity
annuity certain
contingent annuity
none of the above
12. Nancy plays drums in a dance band on weekends in addition to her full-time job at the local junior college. Nancy decided on her 35th birthday to establish her own retirement savings account by investing $2,400.00 of her weekend earnings every six months into an ordinary annuity paying 12% interest compounded semiannually. If Nancy makes these regular deposits until her 65th birthday, how much will this retirement account be worth? (Points: 2)
$1,297,503.10
$1,281,903.10
$1,297,503.01
$1,279,507.20
none of the above
13. Derek established his own retirement account ten years ago. He has discovered that he can obtain a better rate for the next 10 years at 12% interest compounded semiannually. Consequently, Derek established a new ordinary annuity account (beginning amount $0.00) and he will contribute $7,000.00 semiannually into the account for the next 10 years. What will be the value of this account at the end of the 10 year period? (Points: 2)
$244,707.61
$83,652.59
$264,501.86
$257,502.00
none of the above
14. The table factor for an annuity due of 4% compounded semiannually for 4 years is: (Points: 2)
8.923740
7.436704
2.981042
8.582961
none of the above
15. The amount of interest on an ordinary annuity of $11,600.00 for 5 years at 8% compounded semiannually is: (Points: 2)
$139,269.60
$23,296.60
$116,000.00
$23,269.60
None of the above
True
False
2. The monthly payment of rent is an example of a renter's annuity. (Points: 2)
True
False
3. A contingent annuity has a specific number of payment periods. (Points: 2)
True
False
4. An annuity with payments made at the end of each period is called an ordinary annuity. (Points: 2)
True
False
5. With an annuity due no interest is paid in the first period. (Points: 2)
True
False
6. The amount of an $8,000.00, 10%, 5 year ordinary annuity compounded semiannually is $100,624. (Points: 2)
True
False
7. The amount of interest on an ordinary annuity of $11,600.00 for 5 years at 8% compounded semiannually is $32,269.00. (Points: 2)
True
False
8. The maturity value of a transaction is equal to the principal plus the rate. (Points: 2)
True
False
9. The deposits or payments are made at the end of the period in ordinary annuities. (Points: 2)
True
False
10. John owns five health food stores in the Columbia area, and they are realizing a good profit. John decides to invest a portion of the profits in an annuity offered by Penn Life Insurance. Penn Life will guarantee John 8% interest compounded quarterly for the first 5 years, as long as he deposits $10,000.00 every quarter of the term of the guaranteed rate. Assuming John fulfills the obligations of the investment, what will be the value of the investment at the end of the 5 year term? (Points: 2)
$261,832.74
$245,446.58
$242,970.00
$255,446.40
none of the above
11. An annuity without a specific number of payment periods is termed a
: (Points: 2)non-standard annuity
annual annuity
annuity certain
contingent annuity
none of the above
12. Nancy plays drums in a dance band on weekends in addition to her full-time job at the local junior college. Nancy decided on her 35th birthday to establish her own retirement savings account by investing $2,400.00 of her weekend earnings every six months into an ordinary annuity paying 12% interest compounded semiannually. If Nancy makes these regular deposits until her 65th birthday, how much will this retirement account be worth? (Points: 2)
$1,297,503.10
$1,281,903.10
$1,297,503.01
$1,279,507.20
none of the above
13. Derek established his own retirement account ten years ago. He has discovered that he can obtain a better rate for the next 10 years at 12% interest compounded semiannually. Consequently, Derek established a new ordinary annuity account (beginning amount $0.00) and he will contribute $7,000.00 semiannually into the account for the next 10 years. What will be the value of this account at the end of the 10 year period? (Points: 2)
$244,707.61
$83,652.59
$264,501.86
$257,502.00
none of the above
14. The table factor for an annuity due of 4% compounded semiannually for 4 years is: (Points: 2)
8.923740
7.436704
2.981042
8.582961
none of the above
15. The amount of interest on an ordinary annuity of $11,600.00 for 5 years at 8% compounded semiannually is: (Points: 2)
$139,269.60
$23,296.60
$116,000.00
$23,269.60
None of the above