Question

If $81,000 is invested in an annuity that earns 5.1%, compounded quarterly, what payments will it provide at the end of each quarter for the next 4 1 2 years

Answer 1

Answer:

C = $ 5064.61

Explanation:

You are given the present value of an annuity   PV = 81 000

5.1 %   is .051 in decimal form  

    quarterly, this is  i =  .051/4  interest per period (3 months)

4 1/2 years is    n = 18 periods

The equation to use is  ( you just have to look these up.....there are many different situations)

PV = C * {  (1-(1+i)^-n) / i }

Plugging in the above numbers results in:

C = $ 5064.61