Question

Nelson decides to invest $1,000,000 in a period annuity that earns 4. 8% apr compounded monthly for a period of 15 years. How much money will nelson be paid each month?.

Answer 1

Step-by-step explanation:

To find the monthly payment, we can use the formula for the present value of an annuity:

PV = PMT x [1 - (1 + r/n)^(-nt)] / (r/n)

where PV is the present value of the annuity, PMT is the monthly payment, r is the annual interest rate, n is the number of compounding periods per year, and t is the total number of years.

In this case, PV is $1,000,000, r is 4.8% per year, n is 12 (since interest is compounded monthly), and t is 15 years. We want to solve for PMT.

Plugging in the values, we get:

$1,000,000 = PMT x [1 - (1 + 0.048/12)^(-12*15)] / (0.048/12)

Simplifying, we get:

PMT = $7,888.26

So Nelson can expect to receive a monthly payment of $7,888.26 from the annuity.