SOLUTION: Find the monthly payment that will yield the future value of $260,000 using an ordinary annuity at 10.5% interest for 42 years. (Round the answer to the nearest cent.) I'm havin

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Question 1029053: Find the monthly payment that will yield the future value of $260,000 using an ordinary annuity at 10.5% interest for 42 years. (Round the answer to the nearest cent.)
I'm having a hard time with problems like this. The answer I keep coming up with is $49.86. I'm looking for a good explanation of how to work this out. Thanks in advance!!
Answer by robertb(5830) About Me  (Show Source):
You can put this solution on YOUR website!
For ordinary annuity, the formula for the future value (or amount A) is
A+=+R%28%28%281%2Br%2Fn%29%5E%28nt%29-1%29%2F%28r%2Fn%29%29


where A = $260,000, r = 0.105, t = 42, and n = 12, and we are solving for the monthly payment R.
==> 260000=+R%28%28%281%2B0.105%2F12%29%5E%2812%2A42%29-1%29%2F%280.105%2F12%29%29
==> 260000=+R%28%28%281.00875%29%5E504-1%29%2F0.00875%29
==> R = $28.54, the monthly payment.