Final answer:
To find the amount of each annuity payment, you can use the formula for the present value of an annuity. Given a present value of $1000 and an interest rate of 15%, each annuity payment would be approximately $110.39.
Step-by-step explanation:
To find the amount of each annuity payment, we can use the formula for the present value of an annuity:
PV = A × (1 - (1 + r)^(-n))/r
Where PV is the present value, A is the annuity payment, r is the interest rate per period, and n is the number of periods.
Given that the present value is $1000 and the interest rate is 15% (or 0.15), we can plug in these values to solve for A:
$1000 = A × (1 - (1 + 0.15)^(-5))/0.15
Simplifying the equation, we get:
A ≈ $1000 × (0.872)-1 × 0.15
A ≈ $1000 × 7.359 × 0.15
A ≈ $110.385
Therefore, the amount of each annuity payment is approximately $110.39.