Question

I'm not asking for an answer, but trying to understand how to set this formula.

Nathan decides to invest $900,000 in a period annuity that earns 4.8% APR compounded monthly for a period of 20 years. How much money will Nathan be paid each month?

Thank you!

Answer 1

A = P(1 + r/n)nt
Amount = Principal (1 + interest rate in decimal form divided by number of times interest is compounded per year)number of years
Amount = $900,000 (1 + 4.8/12)20

Answer 2

The formula of the present value of annuity ordinary
Pv=pmt [(1-(1+r/k)^(-kn))÷(r/k)]
To find the monthly payment solve for pmt
Pmt=pv÷[(1-(1+r/k)^(-kn))÷(r/k)]
Pv 900000
R 0.048
K compounded monthly 12
N 20 years

Pmt=900,000÷((1−(1+0.048÷12)^(
−12×20))÷(0.048÷12))
=5,840.62