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The present value of an annuity is given. Find the periodic payment. (Round your final answer to two decimal places.)

Present value = $13,000, and the interest rate is 6.3% compounded monthly for 9 years.

User Kir Chou
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Final answer:

To find the periodic payment of an annuity, use the formula: PMT = PV * r / (1 - (1+r)^(-n)). In this case, the periodic payment is approximately $143.70.

Step-by-step explanation:

To find the periodic payment of an annuity, we can use the formula:

PMT = PV * r / (1 - (1+r)^(-n))

Where PMT is the periodic payment, PV is the present value, r is the interest rate per period, and n is the number of periods.

In this case, the present value is $13,000, the interest rate is 6.3% compounded monthly (which is equivalent to a monthly interest rate of 0.063/12 = 0.00525), and the number of periods is 9 years * 12 months/year = 108 months.

Plugging in these values into the formula, we get:

PMT = 13000 * 0.00525 / (1 - (1+0.00525)^(-108))

Simplifying this expression gives:

PMT ≈ $143.70

User Kata
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