Reference no: EM132861916

Questions -

Q1. Rita desires to purchase an ordinary annuity that will pay her $4,000 a year for the next 20 years. She is expecting that the annual interest rates will be 8% over that time period. The maximum price that Rita will be willing to pay for the annuity is closest to:

a. 32,000

b. 39,273

c. 40,000

d. 80,000

Q2. What amount will Miley need to put in the bank today at 4% interest in order to have $20,000 in 5 years?

a. 16,000

b. 16,439

c. 17,439

d. 20,000

Q3. Which of the following choices is considered as an annuity? Explain.

a. Niall gets $10 this year and $20 next

b. Rexha gets $10 in 3 months and $10 6 months later

c. Taylor gets $50 in 6 months and $20 6 months later

d. Nina gets $100 every year for the rest of her life

Q4. If Sabrina puts $1,000 in the bank today at 6%, what amount will she have in 3 years?

a. 1,060.00

b. 1,121.10

c. 1,191.10

d. 1,241.10

Q5. Cardi is thinking of investing in a zero-coupon bond that sells for $250. At maturity in 16 years, it will be redeemed for $1,000. What approximate annual rate of growth does this represent?

a. 8%

b. 9%

c. 12%

d. 25%