A retiree inherits $87,000 and invests it at an annual rate of 6.5%, compounded monthly, in an annuity that provides an amount at the end of each month for the next 17 years. Find the monthly amount. Round your answer to the nearest cent.
A)$3,700.58
B)$8,192.95
C)$2,203.13
D)$705.68
E)$555.93

Question

A retiree inherits $87,000 and invests it at an annual rate of 6.5%, compounded monthly, in an annuity that provides an amount at the end of each month for the next 17 years. Find the monthly amount. Round your answer to the nearest cent. ​
A)$3,700.58
B)$8,192.95
C)$2,203.13
D)$705.68
E)$555.93

Quizplus · Accepted Answer

The monthly amount can be calculated using the formula for the annuity payment: PMT = P * (r/n) / (1 - (1 + r/n)^(-nt)), where P is the principal, r is the annual interest rate, n is the number of compounding periods per year, and t is the number of years. Plugging in the values: P = $87,000, r = 0.065, n = 12, t = 17, the monthly payment is approximately $705.68.

A Retiree Inherits $87,000 and Invests It at an Annual