Question

1. As a result of a court settlement, an accident victim is awarded $2.1 million. The attorney takes one-third of this amount, another third is used for immediate expenses, and the remaining third is used to set up an annuity. What amount will this annuity pay at the beginning of each quarter for the next 6 years if the annuity earns 7.2%, compounded quarterly?

2.An insurance settlement of $3 million must replace Trixie Eden's income for the next 35 years. What income will this settlement provide at the end of each month if it is invested in an annuity that earns 7.3%, compounded monthly?

3. A company wants to have $30,000 at the beginning of each 6-month period for the next 4 1/2 years. If an annuity is set up for this purpose, how much must be invested now if the annuity earns 6.66%, compounded semiannually?

4.Find the present value of an annuity due that pays $2000 at the beginning of each quarter for the next 6 years. Assume that money is worth 5.8%, compounded quarterly. (Round your answer to the nearest cent.)

5. Jane Adele deposits $1,800 in an account at the beginning of each 3-month period for 10 years. If the account pays interest at the rate of 4%, compounded quarterly, how much will she have in her account after 10 years?

6.Grandparents plan to open an account on their grandchild's birthday and contribute each month until she goes to college. How much must they contribute at the beginning of each month in an investment that pays 12%, compounded monthly, if they want the balance to be $110,000 at the end of 18 years?

7.Sam deposits $900 at the end of every 6 months in an account that pays 7%, compounded semiannually. How much will he have at the end of 5 years?

8.A family wants to have a $220,000 college fund for their children at the end of 16 years. What contribution must be made at the end of each quarter if their investment pays 7.9%, compounded quarterly?

9.Jake Werkheiser decides to invest $8000 in an IRA at the end of each year for the next 8 years. If he makes these investments, and if the certificates pay 10%, compounded annually, how much will he have at the end of the 8 years?

10. Find the future value of an annuity due of $400 each quarter for 2 1/2 years at 13%, compounded quarterly. (Round your answer to the nearest cent.)

Answer 1

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