Use Present Value ordinary annuity "PVoa", and solve for PMT:
PVoa = PMT[(1 - (1 / (1 + r)^n)) / r]
r = 0.052 /12months per year = 0.00433
n = 4 years * 12 months per year = 48
use the formula...
4,000 = PMT[( 1 - (1 / 1.00433^48)) / 0.00433]
4,000 = PMT[(1 - 0.81257) / 0.00433]
4,000 = PMT[43.25259]
PMT = $92.48
FYI: My calculator "remembers" all the numbers after the decimal point, but I've only typed up to 5 places after the decimal point.
500 different ways, huh (?) ... and you did not share them with us.
First, I turn on my calculator. Then I punch in some numbers. Then I hit the "compute" button.
Or, you could goofle the formula [key word annuity], or you could use the set-ups in excel. {And, lucky for you, there are less than 500 financial formulas available.} [ hint: PAYMENTS ]
P S the book is correct.
no annuity compounds monthly at that rate
it would b yrly
4000x 0,052
Your grandmother has set up an annuity of $4000 in an account that pays 5.2%/a compounded monthly. What equal monthly payments will the annuity provide for in the next 4 years?
According to the back of the textbook, the answer is $92.48 but I've been trying to do it about 500 different ways and I can't even get anything remotely close to that.... help?! thank you in advance
