Find the amount of each regular payment to provide $9,500 in 4 years, at an annual rate r = 9%, compounded monthly.
A)$165.16
B)$145.96
C)$172.96
D)$180.76
E)$179.66

Question

Quizplus · Accepted Answer

The formula to find the regular payment is:

payment = (future value * r/12) / (1 - (1 + r/12)^(-n*12))

Where:
- future value is $9,500
- r is 9%
- n is 4 years

Substituting the values:

payment = (9500 * 0.09/12) / (1 - (1 + 0.09/12)^(-4*12))
payment = $165.16 (rounded to the nearest cent)

Therefore, the best choice is (A) $165.16, which is closest to the calculated value.

Find the Amount of Each Regular Payment to Provide $9,500