Annuities – NBC Institute

BMF – Nov 2020 – L1 – SA – Q10 – Basics of Business Finance and Financial Markets

Calculate the amount to set aside annually to accumulate a sum for a car replacement in 5 years.

Question

How much should Mr. Eaglet set aside at the end of each year to replace his motor car in 5 years’ time if the cost of a new car remains at ₦5 million and the rate of interest stays at 7% per annum?
A. N669,349.23
B. N779,349.23
C. N869,349.23
D. N979,349.23
E. N989,349.23

Answer

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Tags: Annuities, Financial planning, Future Value, Savings
Level: Level 1

Topic: Basics of Business Finance and Financial Markets
Series: NOV 2020

QT – Nov 2016 – L1 – Q4a – Mathematics of Business Finance

Explain the terms annuities, sinking fund, and amortization related to loan repayment.

Question

One of the most important applications of annuities is the repayment of interest-bearing debts. These debts can be paid by making periodic deposits into a sinking fund, which is used at a future date to pay the principal of the debt, or by making periodic payments that cover the outstanding interest and the principal. This second method is called amortization.

Required:
i) Explain the term annuities as used in the statement above. (2 marks)
ii) What is a sinking fund? (2 marks)
iii) When is a loan with a fixed rate of interest said to be amortized? (1 mark)

Answer

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Tags: Amortization, Annuities, Loan Repayment, Sinking Fund
Level: Level 1

Topic: Mathematics of Business Finance
Series: NOV 2016

BMF – Nov 2020 – L1 – SA – Q10 – Basics of Business Finance and Financial Markets

Calculate the amount to set aside annually to accumulate a sum for a car replacement in 5 years.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Annuities, Financial planning, Future Value, Savings
Level: Level 1

Topic: Basics of Business Finance and Financial Markets
Series: NOV 2020

QT – Nov 2016 – L1 – Q4a – Mathematics of Business Finance

Explain the terms annuities, sinking fund, and amortization related to loan repayment.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Amortization, Annuities, Loan Repayment, Sinking Fund
Level: Level 1

Topic: Mathematics of Business Finance
Series: NOV 2016

Question Tag: Annuities

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BMF – Nov 2020 – L1 – SA – Q10 – Basics of Business Finance and Financial Markets

Calculate the amount to set aside annually to accumulate a sum for a car replacement in 5 years.

QT – Nov 2016 – L1 – Q4a – Mathematics of Business Finance

Explain the terms annuities, sinking fund, and amortization related to loan repayment.

BMF – Nov 2020 – L1 – SA – Q10 – Basics of Business Finance and Financial Markets

Calculate the amount to set aside annually to accumulate a sum for a car replacement in 5 years.

QT – Nov 2016 – L1 – Q4a – Mathematics of Business Finance

Explain the terms annuities, sinking fund, and amortization related to loan repayment.

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BMF – Nov 2020 – L1 – SA – Q10 – Basics of Business Finance and Financial Markets

Calculate the amount to set aside annually to accumulate a sum for a car replacement in 5 years.

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QT – Nov 2016 – L1 – Q4a – Mathematics of Business Finance

Explain the terms annuities, sinking fund, and amortization related to loan repayment.

You're reporting an error for "QT – Nov 2016 – L1 – Q4a – Mathematics of Business Finance"

BMF – Nov 2020 – L1 – SA – Q10 – Basics of Business Finance and Financial Markets

Calculate the amount to set aside annually to accumulate a sum for a car replacement in 5 years.

You're reporting an error for "BMF – Nov 2020 – L1 – SA – Q10 – Basics of Business Finance and Financial Markets"

QT – Nov 2016 – L1 – Q4a – Mathematics of Business Finance

Explain the terms annuities, sinking fund, and amortization related to loan repayment.

You're reporting an error for "QT – Nov 2016 – L1 – Q4a – Mathematics of Business Finance"

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