A) 3.72%
B) 4.13%
C) 4.59%
D) 5.05%
E) 5.56%
G) None of the above
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A) If some cash flows occur at the beginning of the periods while others occur at the ends, then we have what the textbook defines as a variable annuity.
B) The cash flows for an ordinary (or deferred) annuity all occur at the beginning of the periods.
C) If a series of unequal cash flows occurs at regular intervals, such as once a year, then the series is by definition an annuity.
D) The cash flows for an annuity due must all occur at the beginning of the periods.
E) The cash flows for an annuity may vary from period to period, but they must occur at regular intervals, such as once a year or once a month.
G) C) and D)
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A) $1,067.95
B) $1,124.16
C) $1,183.33
D) $1,245.61
E) $1,311.17
G) B) and D)
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B) False
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A) An investment that has a nominal rate of 6% with semiannual payments will have an effective rate that is smaller than 6%.
B) The present value of a 3-year, $150 ordinary annuity will exceed the present value of a 3-year, $150 annuity due.
C) If a loan has a nominal annual rate of 7%, then the effective rate will never be less than 7%.
D) If a loan or investment has annual payments, then the effective, periodic, and nominal rates of interest will all be different.
E) The proportion of the payment that goes toward interest on a fully amortized loan increases over time.
G) D) and E)
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A) 7.48
B) 8.80
C) 10.35
D) 12.18
E) 14.33
G) B) and D)
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A) $205.83
B) $216.67
C) $228.07
D) $240.08
E) $252.08
G) A) and E)
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B) False
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B) False
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A) $20,993
B) $22,098
C) $23,261
D) $24,424
E) $25,645
G) B) and D)
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A) 14.39
B) 15.15
C) 15.95
D) 16.79
E) 17.67
G) D) and E)
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A) $11,262.88
B) $11,826.02
C) $12,417.32
D) $13,038.19
E) $13,690.10
G) B) and D)
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A) $24,736
B) $26,038
C) $27,409
D) $28,779
E) $30,218
G) A) and D)
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A) The discount rate decreases.
B) The cash flows are in the form of a deferred annuity, and they total to $100,000. You learn that the annuity lasts for only 5 rather than 10 years, hence that each payment is for $20,000 rather than for $10,000.
C) The discount rate increases.
D) The riskiness of the investment's cash flows decreases.
E) The total amount of cash flows remains the same, but more of the cash flows are received in the earlier years and less are received in the later years.
G) B) and E)
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A) The proportion of interest versus principal repayment would be the same for each of the 8 payments.
B) The annual payments would be larger if the interest rate were lower.
C) If the loan were amortized over 10 years rather than 8 years, and if the interest rate were the same in either case, the first payment would include more dollars of interest under the 8-year amortization plan.
D) The proportion of each payment that represents interest as opposed to repayment of principal would be lower if the interest rate were lower.
E) The last payment would have a higher proportion of interest than the first payment.
G) A) and D)
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B) False
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A) 8.46%
B) 8.90%
C) 9.37%
D) 9.86%
E) 10.38%
G) None of the above
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A) $438.03
B) $461.08
C) $485.35
D) $510.89
E) $537.78
G) None of the above
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B) False
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A) The discount rate increases.
B) The cash flows are in the form of a deferred annuity, and they total to $100,000. You learn that the annuity lasts for 10 years rather than 5 years, hence that each payment is for $10,000 rather than for $20,000.
C) The discount rate decreases.
D) The riskiness of the investment's cash flows increases.
E) The total amount of cash flows remains the same, but more of the cash flows are received in the later years and less are received in the earlier years.
G) A) and D)
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