document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1194574>Question 1194574</A>: <I><SPAN STYLE=\"word-break: break-all;\"> The amount (future value) of an ordinary annuity is given. Find the periodic payment. (Round your final answer to two decimal places.)<BR>\n" );
document.write( "A = $22,500, and the annuity earns 4% annual interest compounded monthly for 10 years.\r<BR>\n" );
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document.write( "$ </SPAN>\n" );
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document.write( "We'll use this formula<BR>\n" );
document.write( "FV = P*( (1+i)^n - 1 )/i<BR>\n" );
document.write( "which is the ordinary future value annuity\r<BR>\n" );
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document.write( "where,<BR>\n" );
document.write( "FV = future value<BR>\n" );
document.write( "P = monthly payment<BR>\n" );
document.write( "i = interest rate per month in decimal form<BR>\n" );
document.write( "n = number of months\r<BR>\n" );
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document.write( "In this case,<BR>\n" );
document.write( "FV = 22500 dollars<BR>\n" );
document.write( "P = unknown<BR>\n" );
document.write( "i = 0.04/12 = 0.003333 approximately<BR>\n" );
document.write( "n = 10*12 = 120 months (equivalent to 10 years)\r<BR>\n" );
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document.write( "Let's solve for P<BR>\n" );
document.write( "FV = P*( (1+i)^n - 1 )/i<BR>\n" );
document.write( "22500 = P*( (1+0.003333)^120 - 1 )/0.003333<BR>\n" );
document.write( "22500 = P*147.246699190856<BR>\n" );
document.write( "P = 22500/147.246699190856<BR>\n" );
document.write( "P = 152.804783561472<BR>\n" );
document.write( "P = 152.80\r<BR>\n" );
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document.write( "Answer: <font color=red>$152.80</font><BR>\n" );
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