Find the price now of an annuity which pays $3,000 at the end of every year for ten years, but which is deferred for two years, if the interest rate is 4.4% compounded every quarter

To Purchase This Material Click below Link

http://www.tutorialoutlet.com/all-miscellaneous/find-the-price-now-of-an-annuity-which-pays-3-000-at-the-end-of-every-year-for-ten-years-but-which-is-deferred-for-two-years-if-the-interest-rate-is-4-4-compounded-every-quarter

FOR MORE CLASSES VISIT

www.tutorialoutlet.com

Assignment 11 Functions & Annuities
To be handed in by 2pm, Monday 5th of June
Examples:
A. Construct an amortisation schedule for a loan of $900 which is to be repaid
in three equal quarterly payments beginning in 3 months time, at an interest
rate of 6% p.a. compounded monthly.
B. Find the interest rate i p.a. which will enable a perpetuity which is purchased
for $3000 to pay $330 at the end of each year (forever).
Questions:
1. The winner of a lottery is given three choices for the the payments:
(a) $900,000 now;
(b) Payments of $100,000 per year for the next twelve years, starting now;
(c) Payments of $101,000 per year for twelve years, beginning in one years’
time.
Determine which is the better option if the interest rate is 5% per annum.
2. How much money is needed to establish a scholarship fund paying $60,000
annually (forever) if the fund will earn interest at 6% p.a. and if the first payment is made after one year?

3. For the interest rate of 5% p.a. paid semi-annually (every 6 months), find
the equivalent rate i per annum paid:
(a) annually;
(b) quarterly (every 3 months);
(c) monthly;
(d) weekly;
(e) continuously.
4. Consider a loan of $100,000 which is to be repaid in 15 years with equal
monthly repayments, beginning one month after the loan is taken out. The
interest rate for the duration of the loan is 6% p.a. compounded monthly.
(a) Calculate the monthly repayment amount.
(b) Use Excel to draw up the loan repayment schedule. Do not print this
out.
(c) Use the schedule to find the interest component of the 60th payment
and the balance after the 120th payment.
(d) Find the total payments made and the total interest payments. 5. Consider the loan in Question 4, but suppose instead that the monthly
payments are only interest repayments on the (full amount of) the loan but
that there is one final repayment in 15 years time of $100,000. Find the
present value of both the principal repayment and the interest payments
and verify they sum to $100,000.
6. Find the price now of an annuity which pays $3,000 at the end of every year
for ten years, but which is deferred for two years, if the interest rate is 4.4%
compounded every quarter.