FV of an annuity Answer: e Diff: E

1. What is the future value of a 5-year ordinary annuity with annual payments of
$200, evaluated at a 15 percent interest rate?

a. $ 670.44
b. $ 842.91
c. $1,169.56
d. $1,522.64
e. $1,348.48

FV of an annuity Answer: a Diff: E N

2. Today is your 23rd birthday. Your aunt just gave you $1,000. You have used the
money to open up a brokerage account. Your plan is to contribute an additional
$2,000 to the account each year on your birthday, up through and including your
65th birthday, starting next year. The account has an annual expected return of 12
percent. How much do you expect to have in the account right after you make the
final $2,000 contribution on your 65th birthday?

a. $2,045,442
b. $1,811,996
c. $2,292,895
d. $1,824,502
e. $2,031,435
FV of annuity due Answer: d Diff: E N
3. Today is Janet’s 23rd birthday. Starting today, Janet plans to begin saving for her
retirement. Her plan is to contribute $1,000 to a brokerage account each year on
her birthday. Her first contribution will take place today. Her 42nd and final
contribution will take place on her 64th birthday. Her aunt has decided to help
Janet with her savings, which is why she gave Janet $10,000 today as a birthday
present to help get her account started. Assume that the account has an expected
annual return of 10 percent. How much will Janet expect to have in her account on
her 65th birthday?

a. $ 985,703.62
b. $1,034,488.80
c. $1,085,273.98
d. $1,139,037.68
e. $1,254,041.45

PV of an annuity Answer: a Diff: E

4. What is the present value of a 5-year ordinary annuity with annual payments of
$200, evaluated at a 15 percent interest rate?

a. $ 670.43
b. $ 842.91
c. $1,169.56
d. $1,348.48
e. $1,522.64