Question 1076876: suppose that couple plan to set up an ordinary annuity with a 100000 inheritance they received. what is the size of quaterly paymens they will receive for the next 6years (while their children are in college) if the account pays 7% counmpounded quaterly.
Answer by jorel1380(3719)   (Show Source):
You can put this solution on YOUR website! The typical annuity payment formula is thus: P= r(PV)/1-(1+r)^-n, where P=payment, PV=present value, r= interest rate per period, and n= total number of periods. So, we have:
P=.07/4(100000)/((1-(1+.07/4)^-24))
P=5138.565 as the amount as quarterly payments for the next 6 years. ☺☺☺☺
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