What would be the monthly payment of an ordinary annuity if you want to collect $5,250...
What would be the monthly payment of an ordinary annuity if you want to collect $5,250 in 3 years, given that your account pays an annual rate of interest of 9%, compounded monthly?
Homework Answers
FV of annuity = CF * [ (1+r)^n - 1 ] / r
$ 5250 = CF [ (1+0.0075)^36 - 1 ] / 0.0075
$ 5250 = CF [ (1.0075)^36 - 1 ] / 0.0075
$ 5250 = CF [ 1.3086 - 1 ] / 0.0075
CF = $ 5250 * 0.0075 / 0.3086
= $ 127.57
Pls comment, if any further assistance is required.
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