Question

You have a 20-year annuity with a present value of $575,000. If the APR is 6%, what is the monthly yield?

Answer 1

Answer:

  $4119.48

Step-by-step explanation:

Assuming annuity payments are made at the end of the month, the amortization formula is used for this.

  A = P(r/12)/(1 -(1 +r/12)^(-12t))

Where P is the present value, r is the annual rate (APR), and t is the number of years.

  A = 575,000(0.06/12)/(1 -(1 +0.06/12)^-240)

  A = 4119.48

The monthly yield is $4119.48.