Tute wk 3

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Flinders University *

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BUS101

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Mathematics

Date

Jan 9, 2024

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pdf

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1

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1 MATH 1053 Quantitative Methods for Business Tutorial Week 3 (Annuities and their Applications) Please note: You should review Week 2 topic videos, work through the background reading from the textbook and attempt the questions before coming to the tutorial. Bring a calculator (not one on your mobile phone!) From Topic 3 p. 183 [15.1 Exercises] 48. RETIREMENT ACCOUNT An employer deposits $1200 at the end of each quarter into Natasha’s retirement account. Natasha chooses to put the money into a fund that invests in real estate mortgages that has historically paid 8% compounded quarterly. Find the amount of the annuity in 10 years assuming the yield remains constant. From Topic 3 p. 183 [15.1 Exercises] 49. CHILD-SUPPORT PAYMENTS Becky Smith decides to put the child-support payments from her previous husband into an annuity for the education of her two children. At the end of each month for 4 years, she puts $300 into a mutual fund that has yielded 9% compounded monthly. Find (a) the amount of the annuity and (b) the interest earned. From Topic 3 p. 189 [15.2 Exercises] 18. TRUST FUND Henry Worthington sets up a trust fund for his grandson. He wants his grandson to make withdrawals from the trust fund of $3000 at the end of each quarter for 10 years. Find the amount needed in the trust fund, if money will earn 6% compounded quarterly. From Topic 3 p. 194 [15.3 Exercises] 17. CLEANING MACHINE Smith Dry Cleaning must buy a new cleaning machine in 9 years for $110,000. The firm desires to set up a sinking fund for this purpose. Find the payment into the fund at the end of each year if money in the fund earns 6% compounded annually. Additional Exercises: 1. Jeannie borrows $200,000 from her bank to start a small clothing business. The bank charges an annual interest rate of 4.5% compounded quarterly over 12 years. What quarterly payments will Jeannie have to make on the loan? Find the amount of interest paid. 2. Kaye purchases a new car, placing an immediate deposit and agreeing to make monthly repayments of $500 over the next 5 years. The cash price of the car is $24,990. (a) If the annual interest rate is 15% compounded monthly, what is the amount of Kaye ’s immediate deposit? (b) How much interest will Kaye pay in total? Online Assessable Test 2 – Annuities and their Applications
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