Question

Help please, thanks in advance

Answer 1

Answer: Philip can earn back his initial investment in 12.4 years

Step-by-step explanation:

Amount Invested by Philips in period annuity = 800,000

Annual Percentage Rate (APR) = 5.2%

APR compounded monthly for a period of 20 years.

Amount to be received per annuity period = 800,000 * (((1+(0.052/12))^240)*(0.052/12))/(((1+0.052/12))^240)-1)

= 5368.43

Time taken ( in months ) by Philip to earn back his initial investment = 800,000/5368.43 = 149.02 months

Time taken ( in years ) by Philip to earn back his initial investment = 149.02/12 = 12.4 years

Hope it helps.

Thank you :)