SOLUTION: If $84,000 is invested in an annuity that earns 5.5%, compounded quarterly, what payments will it provide at the end of each quarter for the next 5� years? (Round your answer to th

Question 892083: If $84,000 is invested in an annuity that earns 5.5%, compounded quarterly, what payments will it provide at the end of each quarter for the next 5� years? (Round your answer to the nearest cent.)

Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
if you invest 84,000 into an annuity at 5.5% per year compounded quarterly for 5.5 years, you will be able to extract $4450.75 at the end of each quarter.

At the end of the 5.5 years, there will be nothing left in the account.

To do this manually, you would use the annuity from a present amount formula.

the interest rate per time period would be .055 / 4 = .01375 per quearterly time period.

the number of time periods would be 5.5 * 4 = 22 time quarterly time periods.

the formula to use is in the attached link.

http://www.financeformulas.net/Annuity_Payment_Formula.html

when using the formula in the link, you use the interest rate of .01375.

when using the calculator in the link, you use the interest rate percent of 1.375.

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