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He estimates that he will live another 10 years at the most and wants to spend his savings. He places his money in an account earning 7%. He will make 10 equal annual withdrawals. How much will he be able to withdraw each year?
2. You are considering the purchase of two different insurance annuities. Annuity A will pay you Rs100,000 each year for nine years. Annuity B will pay you Rs. 80,000 per year for 12 years. Assuming your money is worth 10% and that each costs the same to purchase today, which annuity would you prefer? 3. You currently receive Rs.10,000 per year on a contract. You expect it to run another 7 years. Someone wants to buy the contract from you. If you can earn 12% on other investments of this quality, how much would you be willing to sell the contract for?
4. Real estate values in your area are going up at the rate of 14% each year. You want to buy an average house. Today the average price of homes is Rs. 1,000,000. Lenders require 20% down payment. You figure you'll be ready to make the down payment in 6 years. How much should it be?
11. You deposit Rs.3,000 every six months for three years. Interest is 6%,
compounded semiannually. How much will you have in three years? 12. What is the present value of Rs.5000 to be received in five years if interest is 12%, compounded quarterly?
13. If you deposit Rs.1,000 every month for two years and interest is 12%,
compounded monthly, how much will you have at the end of that time? 14. You buy a new car and the loan is for Rs.100,000 to be repaid in three years in monthly installments to include annual interest of 12%. How much will the payments be?
15. An insurance company is willing to settle a dispute with you. They will pay
you Rs.70,000 per year for the next 7 years, or one lump sum right now. Assuming your money is worth 5%, how much would you be willing to settle for?