MCQ - Simple and Compound Interest (Part - 2) CA Foundation Notes | EduRev

Quantitative Aptitude for CA CPT

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CA Foundation : MCQ - Simple and Compound Interest (Part - 2) CA Foundation Notes | EduRev

 Page 2


1. You want to buy an ordinary annuity that will pay you $4,000 
a year for the next 20 years. You expect annual interest rates 
will be 8 percent over that time period. The maximum price you 
would be willing to pay for the annuity is closest to 
• A.$32,000     
• B.$39,272 
C.$40,000     
• D.$80,000 
Answer: 
Page 3


1. You want to buy an ordinary annuity that will pay you $4,000 
a year for the next 20 years. You expect annual interest rates 
will be 8 percent over that time period. The maximum price you 
would be willing to pay for the annuity is closest to 
• A.$32,000     
• B.$39,272 
C.$40,000     
• D.$80,000 
Answer: 
A.$34,898  
B.$40,171 
C.$164,500 
D.$328,282 
Answer: 
Page 4


1. You want to buy an ordinary annuity that will pay you $4,000 
a year for the next 20 years. You expect annual interest rates 
will be 8 percent over that time period. The maximum price you 
would be willing to pay for the annuity is closest to 
• A.$32,000     
• B.$39,272 
C.$40,000     
• D.$80,000 
Answer: 
A.$34,898  
B.$40,171 
C.$164,500 
D.$328,282 
Answer: 
A. fall     
B. rise 
C. remain unchanged 
D .cannot be determined without more  information. 
Answer: 
Page 5


1. You want to buy an ordinary annuity that will pay you $4,000 
a year for the next 20 years. You expect annual interest rates 
will be 8 percent over that time period. The maximum price you 
would be willing to pay for the annuity is closest to 
• A.$32,000     
• B.$39,272 
C.$40,000     
• D.$80,000 
Answer: 
A.$34,898  
B.$40,171 
C.$164,500 
D.$328,282 
Answer: 
A. fall     
B. rise 
C. remain unchanged 
D .cannot be determined without more  information. 
Answer: 
4. For $1,000 you can purchase a 5-year ordinary annuity that will 
pay you a yearly payment of $263.80 for 5 years. The compound 
annual interest rate implied by this arrangement is closest to 
• A.8 percent    
• B.9 percent 
• C.10 percent    
• D.11 percent 
Answer: 
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