Final answer:
The student's question seems to be about calculating the monthly payment for an annuity due with specified terms. However, the question references $16,000 monthly payments, which suggests there may be an error. Further clarification is needed to provide an accurate step-by-step calculation.
Step-by-step explanation:
To calculate the monthly payment for an annuity due of $16,000 with monthly payments for 18 years at an annual interest rate of 8.7%, we would utilize the formula for the present value of an annuity due. However, the information provided does not include an explicit formula for this calculation, nor does it provide the necessary present value factor or the future value of the annuity. To offer a precise answer, I would need to use the annuity due formula which takes into account that payments are made at the beginning of each period:
PV = PMT × [(1 - (1 + r)^(-n)) / r] × (1 + r)
Where:
- PV is the Present Value of the annuity
- PMT is the monthly payment
- r is the monthly interest rate (annual rate divided by 12)
- n is the total number of payments (years multiplied by 12)
However, given the provided reference examples dealing with bonds and other forms of loans, it seems like there might be an error in the initial question since it references $16,000 monthly payments, which would make the calculation for a specific payment unnecessary. Instead, the student might be asking for the present value of the annuity or how to adjust the payment for the given interest rate. More clarity from the student is needed to provide an accurate answer.