Annuity Problems
Problem 1
If RM2,000 is invested at 7% compounded quarterly, what will the final amount be
in 5 years?
Problem 2
How much should be invested at 8% compounded yearly, for the final amount to be
RM5,000 in five years?
Problem 3
If RM200 is invested each month at 8.5% compounded monthly, what will the final
amount be in 4 years?
Problem 4
How much should be invested each month at 9% for it to accumulate to RM8,000 in
three years?
Problem 5
Keith has won a lottery paying him RM2,000 per month for the next 10 years. He'd
rather have the entire sum now. If the interest rate is 7.6%, how much should he
receive?
Problem 6
Mr. A has just donated RM25,000 to his alma mater. Mr. B would like to donate an
equivalent amount, but would like to pay by monthly payments over a five year
period. If the interest rate is 8.2%, determine the size of the monthly payment?
Problem 7
How much money should be deposited at the end of each month in an account
paying 7.5% for it to amount to RM10,000 in 5 years?
Problem 8
At the end of each month Rita deposits RM300 in an account that pays 5%. What
will the final amount be in 4 years?
Problem 9
Shawn has won a lottery paying him RM10,000 per month for the next 20 years.
He'd rather have the whole amount in one lump sum today. If the current interest
rate is 8.2%, how much money can he hope to get?
Problem 10
Sonya bought a car for RM15,000. Find the monthly payment if the loan is to be
amortized over 5 years at a rate of 10.1%.
Problem 11
Vijay's tuition at Stanford for the next year is RM32,000. His parents have decided to
pay the tuition by making nine monthly payments. If the interest rate is 9%, what is
the monthly payment?
Problem 12
Mr. Chang wants to retire in 10 years and can save RM650 every three months. If
the interest rate is 7.8%, how much will he have at the end of 5 years?
Problem 13
A firm needs to replace most of its machinery in five years at a cost of RM500,000.
The company wishes to create a sinking fund to have this money available in five
years. How much should the quarterly deposits be if the fund earns 8%?
Problem 14
Mrs. Brown needs RM5,000 in three years. If the interest rate is 9%, how much
should she save at the end of each month to have that amount in three years?
Problem 15
Compute the monthly payment for a house loan of RM200,000 to be financed over
30 years at an interest rate of 10%.
Problem 16
Jackie wants to buy a RM19,000 car, but she can afford to pay only RM300 per
month for 5 years. If the interest rate is 6%, how much does she need to put down?
Problem 17
Friendly Auto offers Jennifer a car for RM2000 down and RM300 per month for 5
years. Jason wants to buy the same car but wants to pay cash. How much must
Jason pay if the interest rate is 9.4%?
Problem 18
The Gomez family bought a house for RM175,000. They paid 20% down and
amortized the rest at 11.2% over a 30-year period. Find their monthly payment
Problem 19
A company has a RM120,000 debt due in 4 years. How much should be deposited at
the end of each quarter in a sinking fund to payoff the debt in four years if the
interest rate is 8%?
Problem 20
You are now 20 years of age and decide to save RM100 at the end of each month
until you are 65. If the interest rate is 9.2%, how much money will you have when
you are 65?
Problem 21
Is it better to receive RM400 at the beginning of each month for six years, or a lump
sum of RM25,000 today if the interest rate is 7%? Explain.
Problem 22
In order to save money for a new computer Jill decided to save RM125 at the
beginning of each month for the next 8 months. If the interest rate is 7%, how
much money will she have at the end of 8 months?
Problem 23
Mrs. Gill puts RM2200 at the end of each year in her account that earns 9% per
year. How much total money will she have in this account after 20 years?
Problem 24
Glen borrowed RM10,000 for his college education at 8% compounded quarterly.
Three years later, after graduating and fnding a job, he decided to start paying of
his loan. If the loan is amortized over five years at 9%, Find his monthly payment
for the next five years.
Problem 25
Mr. and Mrs. Wong purchased their new house for RM350,000. They made a down
payment of 15%, and amortized the rest over 30 years. If the interest rate is 9%,
find their monthly payment.