Question 1088298
Question:
Find the payment that should be used for the annuity due whose future value is given. Assume the compounding period is the same as the payment period. $12,000; quarterly payments for 14 years; interest rate 7.2%
 
Solution:
The future value of quarterly payments of $12000 for 14 years at 7.2% 
F=120000((1+0.072/4)^(4*14)-1)/(0.072/4)
=1143774.05

Initial deposit to contract the quarterly payments 
P=F/(1+.072/4)^(4*14)
=1143774.05/(1.018^(56))
=194136.30

$194136.30 is required to purchase the annuity that pays $120000 quarterly for the next 14 years.