For the following ordinary annuity determine the size of the periodic payment Present Payment Conversion Future Value Value Period Term of Annuity Interest Rate Period $16

Finance Dec 23, 2020

For the following ordinary annuity determine the size of the periodic payment Present Payment Conversion Future Value Value Period Term of Annuity Interest Rate Period $16.900.00 3 months 16.5 years 8.2% quarterly The periodic payment is $ (Round the final answer to the nearest cent as needed Round all intermediate values to six decimal places as needed)

Expert Solution

Given : Interest rate =8.2% with Qtrly compounding

Quarterly interest rate =8.2%/4=2.05% with

Qtrly compounding.

Formula for future value of Ordinary Annuity :

FV= A [ {(1+k)ⁿ-1}/k]

FV = Future annuity value=16,900

A = periodical payment

k=interest rate=2.05% per Qtr

n=periods=16.5 years =16.5*4=66 Qtrs

16900=A*[(1.0205^66-1]/2.05%

A=123.01

So Quarterly periodic payment is $123.01

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