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Tutorial 6a

The document contains 10 word problems involving ordinary annuities with varying interest rates, time periods, and payment amounts. The problems require calculating future and present values of annuities, as well as determining periodic payment amounts or interest rates.

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Yeong Zi Ying
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59 views2 pages

Tutorial 6a

The document contains 10 word problems involving ordinary annuities with varying interest rates, time periods, and payment amounts. The problems require calculating future and present values of annuities, as well as determining periodic payment amounts or interest rates.

Uploaded by

Yeong Zi Ying
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Tutorial 6a

Ordinary Annuity

1. Suppose RM1500 is deposited at the end of each year for the next 6 years in
an account paying 8% per year compounded annually. How much will be in the
account at the end of this period?

2. Sara plans to deposit RM24,000 at the end of each year for 7 years in an
account paying 6% compounded annually. How much will she have in her
account after 7 years? How much interest will she earn? Sara’s sister advises
her to deposit RM2000 instead at the end of each month for the same number
of periods in the same account type. How much will she have on deposit after
7 years?

3. Find the periodic payment that will amount to the given sum of RM10,000 if
interest is 5% compounded annually and payments are made at the end of
each year for 12 years.

4. Find the periodic payment that will amount to the given sum of RM150,000 if
interest is 6% compounded semi-annually and payments are made at the end
of each semi-annual period for 11 years.

5. At the end of each quarter, a 50-yearold woman puts RM3000 in a retirement


account that pays 5% interest compounded quarterly. When she reaches 60,
she withdraws the entire amount and places it in a mutual fund that pays 6.9%
interest compounded monthly. From then on she deposits RM300 in the mutual
fund at the end of each month. How much is in the account when she reaches
age 65?

6. A 45-year-old man puts RM2500 in a retirement account at the end of each


quarter until he reaches the age of 60, then makes no further deposits. If the
account pays 6% interest compounded quarterly, how much will be in the
account when the man retires at age 65?

7. Kamal wants to buy a home theater set which costs RM12000 in 4 years. In
order to accumulate enough money to pay for the set, Kamal decides to deposit
a sum of money at the end of each 6 months in an account paying 6%
compounded semi-annually. How much should each payment be?
8. Shan needs RM10,000 in 8 years. What amount should he deposit at the end
of each quarter at 8% compounded quarterly so that he will have this amount.
Find Shan’s quarterly deposit if the money is deposited at 6% compounded
quarterly.

9. To save for retirement, Kim puts RM300 each month into an ordinary annuity
for 20 years. Interest was compounded monthly. At the end of the 20 years,
the annuity was worth RM147,126. What annual interest rate did she receive?

10. Ahmed needs RM5000 in three years to pay downpayment for his car. How
much should he deposit each month in an account that pays 8% in order to
achieve his goal?

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