Problema Solution
If $85,000 is invested in an annuity that earns 5.5%, compounded quarterly, what payments will it provide at the end of each quarter for the next 5½ years? (Round your answer to the nearest cent.)
Answer provided by our tutors
P = $85,000
r = 0.055 or 5.5% annual interest rate
t = 5.5 years
m = 4 compounding periods per year
i = 0.055/4 interest rate per period
n = 4*5.5 = 21 total number of compounding periods
A = the future value
A = P(1 + i)^n
A = 85000(1 + 0.055/4)^21
A = $113,231.48