Question

Jason wants to receive monthly payments of $3,250 for 15 years. How much does he have to invest now in an annuity that has an annual interest rate of 3.6% to achieve his goal? Round your answer to the nearest hundred.
Answer: $451,500​

Answer 1

The amount she should invest today in the annuity is $455,450.40.

How much should be invested today?

The first step is to determine the future value of the monthly annuity.

Future value = monthly payment x annuity factor

Annuity factor = {[(1+r)^n] - 1} / r

Where:

• r = interest rate = 3.6/12 = 0.3%
• n = number of periods : 15 x 12 = 180

Future value : 3250 x [(1.003^180) - 1] / 0.003 = 774,171.92

The second step is to determine the present value of this future annuity:

774, 171.92 / (1.036^15) = $455,450.40

To learn more about annuities, please check: brainly.com/question/24108530

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