Question

Acme Annuities recently offered an annuity that pays 4.2 % compounded monthly. What equal monthly deposit should be made into this annuity in order to have $80,000 in 9 years?

Answer 1

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N => 9 * 12 = 108 ( For 9 years there will be monthly payments, so total 108 payments)

FV = 80,000 (The Future Value of the investment is $80,000)

I/Y => 4.2%/12 = 0.35% (As the yearly rate is 4.2%, so monthly is divided by 12)

CPT + PMT = 610.82

Equal monthly payment of $610.82 should be paid to make the sum $80,000.

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