SOLUTION: Please help to solve this, thanks. Suppose payments were made at the end of each quarter into an ordinary annuity earning interest at the rate of 10%/year compounded quarterly. If

Algebra ->  Finance -> SOLUTION: Please help to solve this, thanks. Suppose payments were made at the end of each quarter into an ordinary annuity earning interest at the rate of 10%/year compounded quarterly. If      Log On


   

Question 1025944: Please help to solve this, thanks.
Suppose payments were made at the end of each quarter into an ordinary annuity earning interest at the rate of 10%/year compounded quarterly. If the future value of the annuity after 9 yr is $20,000. What was the size of each payment?
Answer by robertb(5830) About Me  (Show Source):
You can put this solution on YOUR website!
The future value of an ordinary annuity is given by the formula
A+=+R%28%28+%281%2Br%2Fn%29%5E%28nt%29+-+1+%29%2F%28r%2Fn%29%29
==>20000+=+R%28%28+%281%2B0.10%2F4%29%5E%284%2A9%29+-+1+%29%2F%280.10%2F4%29%29
==> 20000+=+R%28%281.025%5E36+-+1+%29%2F0.025%29
==> 500%2F%281.025%5E36+-+1+%29+=+R
==> R = $349.03, the quarterly payment