Reference no: EM133136252

Questions -

Q1. How much would a business have to invest in a fund to receive $16,000 at the end of every month for 6 years? The fund has an interest rate of 3.50% compounded monthly and the first withdrawal is to be made in 4 years and 1 month.

Q2. Emily purchased an annuity that had an interest rate of 3.75% compounded semi-annually. It provided her with payments of $1,000 at the end of every month for 6 years. If the first withdrawal is to be made in 4 years and 1 month, how much did she pay for it?

Q3. The Alavis have decided to invest in a college fund for their young son. They invested $40,000 in a deferred annuity that will pay their son at the beginning of every month for 4 years, while he goes to college. If the account earns 2.50% compounded monthly and the annuity payments are deferred for 13 years, what will be the size of the monthly payments?

Q4. Maria invested her savings in a bank at 4.25% compounded monthly. How much money did she invest to enable withdrawals of $4,000 at the beginning of every 6 months from the investment for 6 years, if the first withdrawal is to be made in 10 years?

Q5. A college plans to set up an endowment fund that will provide a scholarship of $4,500 at the end of every quarter, in perpetuity. How much should the college invest in the fund, if the fund earns 5.25% compounded quarterly?

Q6. Diana set up a fund that would pay her family $3,500 at the beginning of every month, in perpetuity. What was the size of the investment in the fund if it was earning 5.50% compounded semi-annually?

Q7. If the market value of a telecommunications share is $289.65, calculate the year-end dividends that it should be able to pay in perpetuity if money is worth 3.75% compounded semi-annually.