For the following ordinary annuity, determine the size of the periodic payment

Finance Dec 25, 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 $16,100.00 1 quarter 11 years 6.4% 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

The amount is computed as follows:

Future value = Quarterly payment x [ [ (1 + r)ⁿ – 1 ] / r ]

r is computed as follows:

= 6.4% / 4

= 1.6%

n is computed as follows:

= 11 x 4

= 44

So, the amount will be as follows:

$ 16,100 = Quarterly payment x [ [ (1 + 0.016)⁴⁴ - 1 ] / 0.016]

$ 16,100 = Quarterly payment x 63.16176838

Quarterly payment = $ 16,100 / 63.16176838

Quarterly payment = $ 254.90

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