If a 5-Year Regular Annuity Has a Present Value of R1,000

question 46

Multiple Choice

If a 5-year regular annuity has a present value of R1,000, and if the interest rate is 10 percent, what is the amount of each annuity payment?

• A) R240.42
• B) R263.80
• C) R300.20
• D) R315.38
• E) R346.87

Calculate the value of annuities and perpetuities, including ordinary annuities, annuities due, deferred annuities, and perpetuities given different compounding frequencies.

Determine the size and duration of payments needed to fund specific financial goals, including retirement savings, loan repayments, and savings for education or other future expenses.

Analyze different investment options and their returns, including comparing annuity quotes from different companies.

Apply compound interest formulas to solve problems related to savings, loans, and investments.

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Definitions:

Capital Balances

The amounts shown in a company's capital accounts, reflecting the capital owned by its owners or shareholders.

Liquidation

The process of converting assets into cash or other assets by selling them to pay off creditors or distribute the remaining assets to shareholders.

Deficiency

A shortfall or lack in quantity or quality, potentially referring to aspects such as nutrients, finances, or resources.

Partner Capital

The amount of equity owned by each partner in a partnership, representing their portion of the total investment in the business.