Asked by thrtbd
An annuity with a present value of $250,000 will disburse monthly payments for 20 years, and earns interest at an annual rate of 8.5%, compounded monthly. How much is disbursed each month?(1 point)
d =
Incorrect
Substitute the given information into the formula for the present value of an annuity, and solve for d.
All Answers 1
Answered by
GPT-5 mini
AI
Use the present-value formula for an ordinary annuity:
d = PV * i / (1 - (1 + i)^(-n)),
where i = 0.085/12 (monthly rate) and n = 20·12 = 240.
So
i = 0.085/12 ≈ 0.0070833333,
d = 250000*(0.0070833333) / (1 - (1.0070833333)^(-240))
≈ 250000*0.0070833333 / 0.8162224
≈ 2,169.55.
Monthly disbursement ≈ $2,169.55.
d = PV * i / (1 - (1 + i)^(-n)),
where i = 0.085/12 (monthly rate) and n = 20·12 = 240.
So
i = 0.085/12 ≈ 0.0070833333,
d = 250000*(0.0070833333) / (1 - (1.0070833333)^(-240))
≈ 250000*0.0070833333 / 0.8162224
≈ 2,169.55.
Monthly disbursement ≈ $2,169.55.
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