SOLUTION: The future value of an annuity is A=$32,000. Periodic payments are made quarterly for four years and the annuity earns 8% compounded quarterly. What are the periodic payments?

Algebra ->  Quadratic Equations and Parabolas  -> Quadratic Equations Lessons  -> Quadratic Equation Lesson -> SOLUTION: The future value of an annuity is A=$32,000. Periodic payments are made quarterly for four years and the annuity earns 8% compounded quarterly. What are the periodic payments?      Log On


   

Question 108283: The future value of an annuity is A=$32,000. Periodic payments are made quarterly for four years and the annuity earns 8% compounded quarterly. What are the periodic payments?
Answer by Fombitz(32388) About Me  (Show Source):
You can put this solution on YOUR website!
The future value of an annuity formula is
FV=P%28%281%2Bi%29%5En-1%29%2Fi%29
where P is the periodic payment, n is number of time periods.
4 years quarterly = 4x4=16 time periods
8% compounded quarterly rate is 8%/4=2%
32000=P%28%281%2B.02%29%5E16-1%29%2F.02%29
32000=P%28%281.02%29%5E16-1%29%2F.02%29
32000=P%28%281.373-1%29%2F.02%29
32000=P%2818.6393%29
P=1716.80
The periodic payments are $1716.80.