Question

1. Find the periodic payments *PMT* necessary to
accumulate the given amount in an annuity account. (Assume
end-of-period deposits and compounding at the same intervals as
deposits. Round your answer to the nearest cent.)

$40,000 in a fund paying 5% per year, with monthly payments for 5 years, if the fund contains $10,000 at the start

*PMT* =

2. Determine the selling price *PV*, per $1,000 maturity
value, of the bond. (Assume twice-yearly interest payments. Do not
round those payments to the nearest cent. Round your selling price
*PV* to the nearest cent.)

20-year, 4.475% bond, with a yield of 4.485%

*PV* =

3. Determine the selling price *PV*, per $1,000 maturity
value, of the bond. (Assume twice-yearly interest payments. Do not
round those payments to the nearest cent. Round your final selling
price to the nearest cent.)

3 year, 4.365% bond, with a yield of 4.455%

*PV* =

4. Meg's pension plan is an annuity with a guaranteed return of 3% per year (compounded quarterly). She would like to retire with a pension of $20,000 per quarter for 25 years. If she works 41 years before retiring, how much money must she and her employer deposit each quarter? (Round your answer to the nearest cent.)

Answer #1

a) | |

PV | $40,000.00 |

Rate = 5%/12 | 0.42% |

Period = 5 x 12 | 60 |

FV | $10,000.00 |

Type | 0 |

PMT(0.42%,60,-40000,10000) | $607.80 |

b) | |

Face Value | $1,000.00 |

Coupon Rate Semiannual = 4.475%/2 | 2.24% |

Coupon payment | $22.38 |

Nper = 20 x 2 | 40 |

Rate = 4.485%/2 | 2.24% |

Selling Price = PV(2.24%,40,-22.38,-1000) | $998.69 |

c) | |

Face Value | $1,000.00 |

Coupon Rate Semiannual = 4.365%/2 | 2.18% |

Coupon payment | $21.82 |

Nper = 3 x 2 | 6 |

Rate = 4.455%/2 | 2.23% |

Selling Price = PV(2.24%,40,-22.38,-1000) | $997.50 |

d) | |

PMT | $25,000.00 |

Period = 25 x 4 | 100 |

Rate = 3%/4 | 0.75% |

PV(0.75%,100,-25000) | $1,754,365.57 |

FV | $1,754,365.57 |

Period = 41 x 4 | 164 |

Rate = 3%/4 | 0.75% |

PMT per Quarter | $5,469.71 |

Find the periodic payments PMT necessary to accumulate the given
amount in an annuity account. (Assume end-of-period deposits and
compounding at the same intervals as deposits. Round your answer to
the nearest cent.)
1) $20,000 in a fund paying 6% per year, with monthly payments
for 10 years
PMT = $
2) $50,000 in a fund paying 5% per year, with monthly payments
for 5 years, if the fund contains $10,000 at the start
PMT = $

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your answer to the nearest cent.)
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PMT = $

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FV = $
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