Question

An ordinary annuity selling at $4,947.11 today promises to make equal payments at the end of each year for the next eight years (N). If the annuity’s appropriate interest rate (I) remains at 6.50% during this time, the annual annuity payment (PMT) will be .

Answer 1

Answer:

$812.49

Explanation:

Given that

Sale value of ordinary annuity = $4,947.11

Time period = 8 years

Interest rate = 6.50%

So by considering the above information, the annual annuity payment is

$4,947.11 = Annual annuity payment × Present value annuity factor at 6.5% for 8 years

$4,947.11 = Annual annuity payment × 6.0888

So, the annual annuity payment is $812.49