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Practice Question of Annuity

1. The document provides examples and problems related to business statistics and mathematics concepts like annuities, interest, loans, and investments. It includes 17 practice problems calculating accumulated values, present values, interest earned, payment amounts, time periods, and more for scenarios involving regular deposits, loans, leases, and retirements with interest compounded monthly, quarterly, or semi-annually at rates from 10-24%. 2. The problems cover a wide range of calculations including determining deposit amounts needed to reach a target balance, calculating total payments on loans or leases, splitting balances or payments into contributions versus interest earned, and calculating time periods to reach a target balance or pay off a loan with regular contributions.

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178 views3 pages

Practice Question of Annuity

1. The document provides examples and problems related to business statistics and mathematics concepts like annuities, interest, loans, and investments. It includes 17 practice problems calculating accumulated values, present values, interest earned, payment amounts, time periods, and more for scenarios involving regular deposits, loans, leases, and retirements with interest compounded monthly, quarterly, or semi-annually at rates from 10-24%. 2. The problems cover a wide range of calculations including determining deposit amounts needed to reach a target balance, calculating total payments on loans or leases, splitting balances or payments into contributions versus interest earned, and calculating time periods to reach a target balance or pay off a loan with regular contributions.

Uploaded by

Awais
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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BUISNESS STATISTICS AND MATHEMATICS

EXERCISE
1. Give short answers to the following:
i. Define annuity.
ii. Differentiate between contingentammity and annuity certain.
iii. Differentiate between ordinary annuity and annuity due.
iv. What is amount of an annuity?
v. Write down the formulate for amount of ordinary annuity as well as
of annuity due and explain the terms appearing in term.
vi. Write down the formula of accumulation factor as well as discount
factor.
vii. What is periodic rent?
viii. Define term of an annuity.
ix. Define annual rent.
x. Define perpetuity.
NUMERICAL PROBLEMS
2. Find the accumulated value of payments of Rs.2000 made at the end of
every three months for twelve years if money is worth 13% compounded
quarterly.
3. Saving for his retirement 25 years from now Mr. Amjad’s set up a savings
plan where by he will deposit Rs.250 at the end month for the next 25
years. Interest is 12% compound monthly .
I. `How much money will be in Mr.Amjad’s account at the date of his
retirement.
II. How much Mr. Amjad contribute?
III. How much is the interest?
4. You want to receive Rs.6000 at the end of every three months for five years
interest is 17.6% compounded quarterly.
a. How much would you have to deposit at the beginning of the five
years period.
b. How much of what you receive is interest.
5. Planning for his sons’s college education Mr. Ali opened an account paying
16.2% compounded monthly . If ordinary annuity payments of Rs.2000 per
month are to be made out account for seven years, how much did Mr. Ali
deposit.
6. What deposit made at the end of each quarter for 15years will accumulate
to Rs.200000 at 16% compounded quarterly.
7. A contract can be fulfilled by making an immediate payment of Rs.7500000
or equal payments at the end of every 6 months for ten years what is the
size of semi-annual payments at 19.6% compounded monthly.
8. How long would it take you to save Rs.75000 by making deposits of Rs. 500
at the end of every month into a savings account earning 15% compounded
monthly.
9. In what period of time could you pay back a loan of Rs.360000 by making
monthly payments of Rs. 9600 if interest is 19.5% compounded monthly.
10.You deposit Rs.1000 at the beginning of each month for five years in an
account paying 10% compounded monthly.
I. How much will the balance in your account be at the end of five
years?
II. How much of the amount will you have contributed?
III. How much of the balance will be interest?
11. Determine the accumulated value after twelve years of deposits of
Rs.3600 made at the beginning of every three months and earning interest
at 14% compounded quarterly.
12.Find the present value of payments of Rs.2500 made at beginning of every
six months for ten years if money is worth 19.5% compounded semi-
annually.
13. Nadeem bought a car signing an installment contract which required
monthly payments of Rs.6225 for three years. The first payment is made
on the date of signing and interest is 24% compounded monthly.
a. What was the cash price?
b. How much will Nadeem pay in total?
c. How much of what he pays will be interest?
14. How much does a depositor have to save at the beginning of every three
months for nine years to accumulate Rs. 350000 if interest is 12%
compounded quarterly?
15. A loan of Rs. 1850000 is to be paid back in 12 years making a payment at
the beginning of every 6 months at a compounded interest rate of 13%
compounded semi- annually.
16. Quarterly payments of Rs. 14450 are to be made at the beginning of every
quarter on a lease value at Rs. 250000 . What should be the term of the lease
if money is worth 16% compounded quarterly.
17. Irfan is saving Rs.6000 at the beginning of each month. How soon can he
retire if he wants to have a retirement fund of 1200000 and interest is 12%
compounded monthly?

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