If $86,000 is invested in an annuity that earns 5.2%, compounded quarterly, what payments will it provide at the end of each quarter for the next 3½ years?

Answer 1

Principal, P = $86000
Compounding period : quarterly
interest, i = 5.2%/4 = 1.3% = 0.013
Number of periods, n = 3.5*4 = 14
R = payment per quarter

P = R(1-(1+i)^(-n))/i, or

R = Pi/(1-(1+i)^(-n))
=$86000*0.013/(1-1/(1.013)^14)
=$86000*(0.0785876)
=$6758.54

Answer 2

This answer makes no sense. the "1-1" part of the fraction would make this DNE. You cannot divide by zero.

Answer 3

This is how the equation should look:

86,000[0.013/([1-(1+.013)^(-14)])]