Question

NI- years? (Round your an If $88,000 is invested in an annuity that eams 5.8%, compounded quarterly, what payments will it provide at the end of each quarter for the next 8 nearest cent.) X Need Help? $173536 Read it Tik to a Tutor

Answer 1

(1) Thepresent value of annuity formula determines the valueof a series of future periodic payments at a given time and is given by the following formula 1-(1+r)* PV. Ordinary Armority EP p = periodic payment r=rate per period n = number of periods Given that PV = $88,000 p = 5.8% 5.8 100 = 0.058 x=8-24 17 = -(4) = 34 p=? 1-(1+r) * PV. Ordinary Aruty 88000 = ? 1-(1+0.058) 0.058 PE 88000 = p(14.7059) 88000 14.7059 = 5983.99 Hence the required periodic payment is $5983.99

(2) Thepresent value of annuity formula determines the valueof a series of future periodic payments at a given time and is given by the following formula 1-(1+r)* Ordinary Armanity PV = p = periodic payment r =rate per period n = number of periods Given that p = $2000 r = 6.6% 6.6 100 = 0.066 n = 6x4 = 24 PV Ordinary Arruty = ? 1-(1+r)* PV. Ordinary Armuty = P -24 1-(1+0.066) = 2000 0.066 = 23767.01 PV. Ordinary Armority = $23767.01