Question

If $75,000 is used to purchase an annuity that pays $950 a month, and if the interest rate is 9% compounded monthly, approximately how many payments are possible?

Answer 1

Ans 120 months or 10 years

Annuity PV Factor =	P [ 1 - ( 1 + r )-n ]
	r
75000 =	950* ( 1 - ((1 / (1 + 9%/12)^n)))
	9%/12
75000 * 9%/12 / 950 =	( 1 - ((1 / (1 + 9%/12)^n)))
0.592105263157895 =	( 1 - ((1 / (1 + 9%/12)^n)))
n =	120 months
or n =	10 years