Answer:
each payment = $214.20
Step-by-step explanation:
For ordinary annuity,
FVOA = PMT x [{(1+r/m)^(n*m)} - 1/(r/m)]
Here, FVOA = $50,000
year, n = 14
Since the interest will be paid monthly, m = 12
interest rate, r = 4.5% = 0.045
PMT = ?
Putting all the values into the ordinary annuity formula,
FVOA = PMT x [{(1+r/m)^(n*m)} - 1/(r/m)]
$50,000 = PMT x [{(1+0.045/12) ^ (14*12)} - 1/(0.045/12)]
or, $50,000 = PMT x [{(1+0.045/12) ^ (14*12)} - 1/(0.045/12)]
or, $50,000 = PMT x [(1.8754 - 1)/0.00375]
or, $50,000 = PMT x [(1.8754 - 1)/0.00375]
or, $50,000 = PMT x 233.4399
or, PMT = $50,000/233.4399
PMT = $214.19
or, monthly payment will be $214.20 (Nearest cent)
