Suppose payments were made at the end of each month into an ordinary annuity earning interest at the rate of 2.5%/year compounded monthly. I

Question

Suppose payments were made at the end of each month into an ordinary annuity earning interest at the rate of 2.5%/year compounded monthly. If the future value of the annuity after 10 years is $60,000, what was the size of each payment? (Round your answer to the nearest cent.) $

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Kim Cúc 2 weeks 2021-09-02T20:00:12+00:00 1 Answers 0 views 0

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    2021-09-02T20:01:57+00:00

    Answer:

    Monthly payment= $440.71

    Step-by-step explanation:

    Giving the following information:

    Mothly interest rate (i)= 0.025/12= 0.00208

    Number of periods (n)= 12*10= 120 months

    Future Value (FV)= $60,000

    To calculate the monthly payment, we need to use the following formula:

    Monthly payment= (FV*i) / [(1+i)^(n) – 1]

    Monthly payment= (60,000*0.00208) / [(1.00208^120) – 1]

    Monthly payment= $440.71

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