Question 892083: If $84,000 is invested in an annuity that earns 5.5%, compounded quarterly, what payments will it provide at the end of each quarter for the next 5½ years? (Round your answer to the nearest cent.)
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! if you invest 84,000 into an annuity at 5.5% per year compounded quarterly for 5.5 years, you will be able to extract $4450.75 at the end of each quarter.
At the end of the 5.5 years, there will be nothing left in the account.
To do this manually, you would use the annuity from a present amount formula.
the interest rate per time period would be .055 / 4 = .01375 per quearterly time period.
the number of time periods would be 5.5 * 4 = 22 time quarterly time periods.
the formula to use is in the attached link.
http://www.financeformulas.net/Annuity_Payment_Formula.html
when using the formula in the link, you use the interest rate of .01375.
when using the calculator in the link, you use the interest rate percent of 1.375.
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