Question

D | Question 2 6.25 pts You purchase an annuity investment that pays you a lump sum amount of $8,359 at the end of the term. You must make $1,000 quarterly payments until the end of the term. How many of these quarterly payments must you make if the investment earns a 5% interest rate? O 12 O 2 O 10

Answer 1

CALCULATION OF THE QUARTERLY INTEREST RATE
Interest Rate =		5%
Quarterly Rate of interest =		1.25%
CALCUALTION OF THE NUMBER OF QUARTERS REQUIRED THAT PAY LUMPSUM 8359
Period (Quarterly)	Deposit	Interest @ 1.25%	Cumulative Balance
1	1,000	$                                 -	$                           1,000
2	1,000	$                          12.50	$                           2,013
3	1,000	$                          25.16	$                           3,038
4	1,000	$                          37.97	$                           4,076
5	1,000	$                          50.95	$                           5,127
6	1,000	$                          64.08	$                           6,191
7	1,000	$                          77.38	$                           7,268
8	1,000	$                          90.85	$                           8,359
After Deposit of Eighth Quarter deposit is reached to $ 8,359.
So, Answer = Option 4 = $ 8,359