Find the amount of each regular payment to provide $5,000 in 5 years, at an annual rate r = 4%, compounded quarterly.
A)$241.08
B)$214.98
C)$227.08
D)$234.08
E)$242.63

Question

Quizplus · Accepted Answer

To find the regular payment amount, we use the future value of an annuity formula: FV = Pmt * [(1 + r/n)^(nt) - 1] / (r/n). Here, FV = $5,000, r = 0.04, n = 4 (quarterly), and t = 5. Solving for Pmt gives approximately $227.08.

Find the Amount of Each Regular Payment to Provide $5,000