4. June Stickney purchased an annuity on January 1, 2016, which, at a 12% annual

Question

4. June Stickney purchased an annuity on January 1, 2016, which, at a 12% annual rate, would yield $6,000 each June 30 and December 31 for the next 6 years. What was the cost of the annuity to Stickney?

Round your answer to two decimal places.

$

5. Five equal annual contributions are to be made to a fund, with the first deposit on December 31, 2016. Determine the equal contributions that, if invested at 10% compounded annually, will produce a fund of $30,000 on December 31, 2021.

Round your answer to two decimal places.

$

6. Beginning on December 31, 2017, 6 equal annual withdrawals are to be made. Determine the equal annual withdrawals if $11,000 is invested at 10% interest compounded annually on December 31, 2016.

Round your answer to two decimal places.

$

Explanation / Answer

Solution:

Question 5

Future value = Amount to be deposited * FVAF@ 10 % for 5 years Future value = 30,000 FVAF @ 10 % for 5 years = 6.1051 Amount to be deposited = 30,000 / FVAF @ 10 % for 5 years 4,913.92

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