Problem
A. How much would a business have to invest in a fund to receive $24,000 at the end of every month for 7 years? The fund has an interest rate of 3.25% compounded monthly and the first withdrawal is to be made in 3 years and 1 month.
B. Sarah purchased an annuity that had an interest rate of 4.00% compounded semi-annually. It provided her with payments of $1,500 at the end of every month for 3 years. If the first withdrawal is to be made in 4 years and 1 month, how much did she pay for it?
C. The Mellows have decided to invest in a college fund for their young son. They invested $30,000 in a deferred . annuity that will pay their son at the beginning of every month for 4 years, while he goes to college. If the account earns 2.50% compounded monthly and the annuity payments are deferred for 15 years, what will be the size of the monthly payments?
D. Brandon invested her savings in a bank at 4.25% compounded monthly. How much money did she invest to enable withdrawals of $4,000 at the beginning of every 6 months from the investment for 7 years, if the first withdrawal is to be made in 12 years?
E. A college plans to set up an endowment fund that will provide a scholarship of $3,000 at the end of every quarter, in perpetuity. How much should the college invest in the fund, if the fund earns 4.50% compounded quarterly?
F. John set up a fund that would pay her family $5,000 at the beginning of every month, in perpetuity. What was the size of the investment in the fund if it was earning 5.50% compounded semi-annually?
G. If the market value of a telecommunications share is $260.95, calculate the year-end dividends that it should be able to pay in perpetuity if money is worth 4.75% compounded semi-annually.