Question

Find the monthly payment that will yield the given future value. (Round your answer to the nearest cent.) $105,000 at 9 1/4 % interest for thirty-two years; ordinary annuity

Answer 1

To find the monthly payment that will yield the given future value of $105,000 at an interest rate of 9 1/4% for 32 years, use the formula for the present value of an ordinary annuity.

Step-by-step explanation:

To find the monthly payment that will yield the given future value, we can use the formula for the present value of an ordinary annuity:

Monthly Payment = Future Value / [(1 + Monthly Interest Rate)^(Number of Payments) - 1]

Using the given information: Future Value = $105,000, Interest Rate = 9.25% = 0.0925, Number of Payments = 32 years * 12 months/year = 384.

Plug the values into the formula and calculate:

• Monthly Interest Rate = 0.0925 / 12 = 0.00771
• Monthly Payment = $105,000 / [(1 + 0.00771)^384 - 1]
• Round the monthly payment to the nearest cent.