## Business Mathematics MCQ on Annuities

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1. Any periodical payment of a fixed amount made at a regular interval :

(a) Annuity

(b) Installment

(c) Fee

(d) Deferred Annuity.

**Answer (a) Annuity**

2. The person obliged to make annuity payment is:

(a) Annuity holder

(b) Annuity Receiver

(c) Annuitator

(d) None of the above

**Answer (c)Annuitator**

3. A lump sum consideration against which Annuity Payments are granted is:

(a) Annuity value

(b) Present value

(c) future value

(d) None of the above

**Answer (b) Present value**

4. The lumpsum amount which is recovered after a certain period against such regular payments (Annuity):

(a) Annuity value

(b) Present value

(c) future value

(d) Accumalated value

**Answer (d) Accumulated value**

5. A fund which is created through periodical contribution for a certain period to meet the expenditure like redemption of debt or replacement of asset:

(a) Annuity Fund

(b) Endowment Fund

(c) Sinking Fund

(d) None of the above

**Answer (c) Sinking Fund**

6. A fund which is created by setting aside a lump sum of money to grow with compound interest to pay for an award, Prize, Scholarship or grant for certain or forever:

(a) Annuity Fund

(b) Endowment Fund

(c) Sinking Fund

(d) None of the above

**Answer (b) Endowment Fund**

7. Annuity which is paid for ever without any stop is:

(a) Annuity Certain

(b) Deferred Annuity

(c) Annuity Contingent

(d) Annuity perpetual

**Answer (d) Annuity perpetual**

8. Annuity which is payable till the happening of a certain event is:

(a) Annuity Certain

(b) Deferred Annuity

(c) Annuity Contingent

(d) Annuity perpetual

**Answer (c) Annuity Contingent**

9. Annuity which is payable at the end of the year is:

(a) Annuity Certain due immediate

(b) Deferred Annuity

(c) Annuity Contingent

(d) Annuity perpetual

**Answer (a) Annuity Certain due immediate**

10. Annuity which is payable at the beginning of the year:

(a) Annuity Certain due immediate

(b) Deferred Annuity

(c) Annuity Contingent

(d) Annuity due prepaid immediate

**Answer (d) Annuity due prepaid immediate**

11. Installments paid at the end of the year are an Annuity refers to:

(a) Annuity certain due immediate.

(b) Annuity due prepaid immediate.

(c) Contingent Annuity.

(d) Deferred Annuity.

**Answer (a) Annuity certain due immediate**

12. What is the future value (amount) of an annuity of 1000 payable for 20 year at the

rate of 8% p.a. compound interest?

(a) 36,868

(b) 40,996

(c) 45,700

(d) 51,160

**Answer (c) 45,700**

13. The present value of perpetuity of Rs.900 a year @ 9% p.a. is:

(a) 9,000

(b) 90

(c) 10,000

(d) 9

**Answer (c) 10,000**

14. A bank pays interest, compounded quarterly, what equal deposits have to be made at the end of each quarter for three years, if we went to have Rs.1,500 at the end of three years:

(a) 110.05

(b) 115.03

(c) 120.03

(d) 125.30

**Answer (b) 115.03**

15. Find the prosent value of an annuity of Rs.1,000 for 14 years reckoning interest at 5% p.a. compound :

(a) 10,000

(b) 9,000

(c) 9,900

(d) 10,500

**Answer (c) 9,900**

16. Determine the amount of an annuity of Rs.3,000 for 15 years allowing compound interest at 4 ¼ % p.a. :

(a) 61,200

(b) 60,000

(c) 55,000

(d) 62,100

**Answer (a) 61,200**

17. Mr. X borrows Rs.6000 upon a contract to repay the same in 20 equal annual instalments beginning with the end of the first year. Determine the annual payment charging interest at 6 p.a. compound:

(a) 525

(b) 523.11

(c) 520.20

(d) 560.10

**Answer (b) 523.11**

18. Find the present value of an annuity of Rs. 3,000, for 15 years allowing interest at 4 ½ % p.a.:

(a) 30,000

(b) 33,000

(c) 32,200

(d) 34,200

**Answer (c) 32,200**

19. A man creates an endowment fund to provide for an annual prize of 500 out of its income. If the fund is invested in 2 ½ % p.a. , the amount of the fund is:

(a) 25,000

(b) 30,000

(c) 32,200

(d) 20,000

**Answer (d) 20,000**

14. The present value of an annuity of Rs.1,000, for 11 years to begin with the maturity of a life insurance policy at the end of 4 years reckoning interest at 5% p.a. compound is:

(a) 7,178

(b) 7,718

(c) 7,700

(d) 7,600

**Answer (b) 7,718**

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