Question 1

What is the present value (or purchase price) of an annuity product which will pay you $2,000 at the end of each year for the next 15 years? Use an interest rate of 9%.

$7,285

$16,121

$2,000

$17,572

Question 2

You receive an inheritance of $25,000 and promptly invest it in an account which yields a 8% annual return. If you withdraw $2,000 at the beginning of each year, how long will the $25,000 last?

the calculator says "ERROR" as the money will last forever.

34 years

10 years

34 months

Question 3

If you invest $1,500 at the beginning of each year into an account which averages a return of 12% approximately how long will it take to accumulate $50,000 in the account?

14.20 years

30.94 months

13.41 years

13 months

Question 4

You are tyring to decide between investing $3,000 or $4,000 at the beginning of each year for the next twenty years into a retirement account yielding 11 percent. After 20 years, how much extra money would you have in your account if you invested $4,000 annually versus $3,000 annually?

$71,265

$213,795

$285,061

$86,594

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Question 5

Five years from now you would like to have $25,000 for a down payment on a home. Assuming you could earn 9% interest, how much money would you have to invest at the end of each year to meet your goal?

$4,177

$3,832

$16,248

$5,372