Suppose payments were made at the end of each quarter into an ordinary annuity earning interest at the rate of 9%/year compounded quarterly. If the future value of the annuity after 8 yr is $80,000, what was the size of each payment?

Answer 1

i = .09/4 = .0225
n = 4(8) = 32
payment = P

P( 1.0225^32 - 1)/.0225 = 8000

solve for P