# Finance: Annuity Review Questions

What are the monthly mortgage payments on a 30-year loan for

$150,000 at 12%?

You have two assets in your portfolio: a stock mutual fund with a

beta of 1.20 and U.S. Treasury securities (assume they are risk free).

What is the beta for your portfolio if 40% of your funds are invested

in the treasury securities?

Find the beta of a portfolio of three stocks. One third of the portfolio

is invested in each of the three stocks. The stocks and their betas

are as follows: Mallmart - beta 1.10, Peak Power - beta 0.85 and

MicroEase - beta 1.40

What is an investment worth that promises to return $10,000 per

year, given a required rate of return of 15%, if the benefits are

expected for 10 years?

What will a deposit of $4,500 at 12% compounded monthly be worth

at the end of 10 years?

How long does it take for $5,000 to grow into $6,742.44 at

10% compounded quarterly?

How much must you deposit at the end of each year in an account

that pays a annual rate of 20 percent, if at the end of 5 years you

want $10,000 in the account?

What interest rate would you need to get to have an annuity of

$7,500 per year accumulate to $279,600 in 15 years

What would you pay for an annuity of $2,000 paid every six months

for 12 years if you could invest your money elsewhere at 10%

compounded semiannually?

Thirty years ago Jesse Jones bought 10 acres of land for $1,000

per acre in what is now downtown Houston. If this land grew in

value at an 8 percent per annum rate, what is it worth today?

A $10,000 car loan has payments of $361.52 per month for three

years. What is the interest rate? Assume monthly compounding

and give the answer in terms of an annual rate.

Find the present value of $1,000 to be received at the end of 2 years

at 12% compounded quarterly?

#### Solution Preview

Please check the attached word document for a better formatted solution

Thank you

1)

Periods = 360 (30 years times 12 months)

Monthly Interest Rate = 12% divided by 12 months = 1%

C = $1,542.92

2 & 3)

To calculate the Beta of a portfolio:

(security A × Weight )+ (securityB × weight)

4)

5)

t = ...

#### Solution Summary

The solution includes a word and an excel sheet that show in steps how to calculate the payments on a loan, the beta of a portfolio, present and future values of investments