Maya buys an annuity due with monthly payments.
a) The annuity lasts 5 years with monthly payments of $200, and i(4) = 10%. How much does Maya pay?
b) The annuity lasts 5 years, i(4) = 10%, and Maya pays $10,000 to buy it. How much are the monthly payments?
c) The annuity lasts 5 years, Maya pays $10,000 to buy it, and monthly payments are $200. What is i(4)?
please include formulas
a
PVOrdinary Annuity = C*[(1-(1+i/100)^(-n))/(i/100)] |
C = Cash flow per period |
i = interest rate |
n = number of payments |
PV= 200*((1-(1+ 10/1200)^(-5*12))/(10/1200)) |
PV = 9413.07 |
b
PVOrdinary Annuity = C*[(1-(1+i/100)^(-n))/(i/100)] |
C = Cash flow per period |
i = interest rate |
n = number of payments |
10000= Cash Flow*((1-(1+ 10/1200)^(-5*12))/(10/1200)) |
Cash Flow = 212.47 |
c
PVOrdinary Annuity = C*[(1-(1+i/100)^(-n))/(i/100)] |
C = Cash flow per period |
i = interest rate |
n = number of payments |
10000= 200*((1-(1+ Interest rate/1200)^(-5*12))/(Interest rate/1200)) |
Interest rate% = 7.42 |
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