Question

Joe Hernandez has inherited $25,000 and wishes to purchase an annuity that will provide him with a steady income over the next 12 years. He has heard that the local bank is currently paying 6% p.A. (compounding annually). If he were to deposit his fund, what is the equal amount would he be able to withdraw at the end of each year for 12 years?

Answer 1

Answer:

p=2982

Step-by-step explanation:

Rate of interest = 6 % p.a

No of year = 12

P.V = $ 25000

Installments (p) = ?

We know the formula of P.V annuity

P.V = P[ 1-(1+r)-n/r]

25000 = P[1-(1+0.06)-12/0.06]

P = 2982 will withdraw annuity

Answer 2

2 always the same number