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| 1 | |
An annuity due is paid out at the beginning of the period. |
| | A) | True |
| | B) | False |
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| 2 | |
Annuities certain have a specific number of payments. |
| | A) | True |
| | B) | False |
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| 3 | |
Sinking funds can be used to retire financial obligations. |
| | A) | True |
| | B) | False |
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| 4 | |
The same table can be used to find the value of an annuity due if 3 extra periods are added along with the subtraction of 2 payments. |
| | A) | True |
| | B) | False |
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| 5 | |
An annuity can never be a stream of payments. |
| | A) | True |
| | B) | False |
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| 6 | |
What I need to put in the bank today to receive a stream of payments into the future is called: |
| | A) | Compounding |
| | B) | Present value |
| | C) | Present value of ordinary annuity |
| | D) | Sinking fund |
| | E) | None of the above |
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| 7 | |
Annuity tables are based on: |
| | A) | 1 dollar |
| | B) | 2 dollars |
| | C) | 3 dollars |
| | D) | 4 dollars |
| | E) | None of the above |
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| 8 | |
The future value of an ordinary annuity compared to an annuity due results in a: |
| | A) | Lower value |
| | B) | Higher value |
| | C) | Same value |
| | D) | Value 4 times the annuity due |
| | E) | None of the above |
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| 9 | |
When you are looking to calculate the payment per period you will be solving for: |
| | A) | Compounding |
| | B) | Present value |
| | C) | Annuity due |
| | D) | Ordinary annuity |
| | E) | None of the above |
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| 10 | |
Opening a retirement account and putting money in at the beginning of each period is a/an: |
| | A) | Present value |
| | B) | Compounding |
| | C) | Annuity due |
| | D) | Ordinary annuity |
| | E) | None of the above |
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| 11 | |
A sinking fund in a table is based on: |
| | A) | 1 year |
| | B) | 1 month |
| | C) | 1 dollar |
| | D) | 2 dollars |
| | E) | None of the above |
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| 12 | |
Sam Lerner invests $7,000 at the end of each year for 15 years. The rate of interest Sam gets is 8% annually. The final value of Sam's investment on this ordinary annuity is: (Use the tables in the handbook) |
| | A) | $105,000.00 |
| | B) | $109,640.70 |
| | C) | $109,640.07 |
| | D) | $190,064.70 |
| | E) | None of the above |
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| 13 | |
Jones Co. borrowed money that is to be repaid in 8 years. So that the loan will be paid back at the end of the 8th year, the company invests $14,000 at the end of each year at 8% compounded annually. The amount of the original loan was: (Use the tables in the handbook) |
| | A) | $80,452.40 |
| | B) | $148,912.40 |
| | C) | $80,525.04 |
| | D) | $148,219.40 |
| | E) | None of the above |
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| 14 | |
Judy Kane wants to know how much must be deposited in her local bank today so that she would receive yearly payments of $30,000 for 20 years at a current rate of 9% compounded annually (Use the tables in the handbook) |
| | A) | $273,855 |
| | B) | $153,480 |
| | C) | $135,840 |
| | D) | $273,558 |
| | E) | None of the above |
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| 15 | |
Ted Williams invests $1,400 at the beginning of each year for 7 years into an account that pays 6% compounded semiannually. The value of the annuity due is: (Use the tables in the handbook) |
| | A) | $15,106.25 |
| | B) | $14,025.10 |
| | C) | $15,875.20 |
| | D) | $16,789.44 |
| | E) | None of the above |
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