SOLUTION: Alan asks you to help him determine the appropriate price to pay for an annuity offering a retirement income of $1,000 per month for 10 years. Assume the interest rate is 6% compou

Algebra ->  Customizable Word Problem Solvers  -> Misc -> SOLUTION: Alan asks you to help him determine the appropriate price to pay for an annuity offering a retirement income of $1,000 per month for 10 years. Assume the interest rate is 6% compou      Log On

Ad: Over 600 Algebra Word Problems at edhelper.com


    

Question 1170486: Alan asks you to help him determine the appropriate price to pay for an annuity offering a retirement income of $1,000 per month for 10 years. Assume the interest rate is 6% compounded monthly.
Answer by Theo(13342) About Me  (Show Source):
You can put this solution on YOUR website!
the following calculator will solve this for you.

https://arachnoid.com/finance/index.html

here's a display of the results of using this calculator.



your inputs are everything except present value (pv)
you click on pv and the calculator tells you what the present value is.

since the interest rate is compounded monthly, the interest rate per month is 6% / 12 = .5 and the number of years is multiplied by 12 to get 120 months.

the payments are given at the end of each month.

the assumptions of this problem are that you are investing 90,073.45 at the beginning of the first month and you are withdrawing 1000 at the end of each month for the next 10 years.