help in homework

New User?

Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / An annuity providing a rate of return of 6

An annuity providing a rate of return of 6

Finance

An annuity providing a rate of return of 6.7% compounded monthly was purchased for $64,000. The annuity pays $590 at the end of each month. How much principal will be repaid in the fifth year? (Do not round the intermediate calculations. Round your answer to the nearest cent.)

 

Principal repaid in the fifth year         $ 

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Answer Preview

Computation of Future Value using FV Function in Excel:

=-fv(rate,nper,pmt,pv)

Here,

FV = Future Value = ?

Rate = 6.7%/12 

Nper = 5 years*12 months = 60 months

PMT = $590

PV = 0

Substituting the values in formula:

=-fv(6.7%/12,60,590,0)

FV or Future Value = $47,471.42

So, Value after 5 years is $41,913.44

 

Principal repaid in the 5th year = $64,000-$41,913.44 = $22,086.56

Sitejabber (5.0)

BBC (5.0)

Trustpilot (4.9)

Google (5.0)