Questions from Business Mathematics

Q: Micheline wishes to purchase a 25-year annuity providing payments of

Micheline wishes to purchase a 25-year annuity providing payments of $1000 per month for the first 15 years and $1500 per month for the remaining 10 years. Sovereign Insurance Co. has quoted her a rat...

Q: The nominal interest rate associated with an ordinary general annuity is 4

The nominal interest rate associated with an ordinary general annuity is 4% compounded quarterly. Rounded to the nearest 0.001%, what is the corresponding periodic rate of interest that matches the pa...

Q: Joshua wants to structure a 20-year annuity so that its

Joshua wants to structure a 20-year annuity so that its end-of-quarter payments are $2000 for the first 10 years and $2500 for the next 10 years. Pacific Life Insurance Co. offers to sell this annuity...

Q: What will be the amount in an RRSP after 25 years if

What will be the amount in an RRSP after 25 years if contributions of $3000 are made at each year-end for the first seven years and month-end contributions of $500 are made for the subsequent 18 years...

Q: Repeat Problem 4 with the change that Arrowsmith Lumber’s cost of capital

Repeat Problem 4 with the change that Arrowsmith Lumber’s cost of capital is 7%. Data from Problem 4: The timber rights to a tract of forest can be purchased for $250,000. The harvesting agreement wo...

Q: Margot’s grades and course credits in her first semester at college are

Margot’s grades and course credits in her first semester at college are listed below. Calculate Margot’s grade point average for the semester.

Q: The nominal interest rate associated with an ordinary general annuity is 8

The nominal interest rate associated with an ordinary general annuity is 8% compounded monthly. Rounded to the nearest 0.001%, what is the corresponding periodic rate of interest that matches the paym...

Q: This problem demonstrates the dependence of an annuity’s future value on the

This problem demonstrates the dependence of an annuity’s future value on the compounding frequency. Suppose $1000 is invested at the end of each year for 25 years. Calculate the future value if the in...

Q: This problem demonstrates the dependence of an annuity’s present value on the

This problem demonstrates the dependence of an annuity’s present value on the compounding frequency. What minimum initial amount will sustain a 25-year annuity paying $1000 at the end of each year if...

Q: An ordinary annuity consists of quarterly payments of $400 for 11

An ordinary annuity consists of quarterly payments of $400 for 11 years. Based on a nominal rate of 6.5% compounded annually, calculate the annuity’s: 1. Present value. 2. Future value