Answered

Explore a diverse range of topics and get expert answers on IDNLearn.com. Find accurate and detailed answers to your questions from our experienced and dedicated community members.

To receive monthly payments of $1500 for 20 years, how much would a person have to invest now in an annuity with an annual interest rate of 3.1% to achieve this goal? Round the answer to the nearest dollar.

Sagot :

Xero099idn

Given the possibility of an investment with an annual interest rate of 3.1 %, the person must deposit $ 580645.16 to receive monthly payments of $ 1500 for 20 years.

How to determine the require investment to receive a desired monthly payment

According to this question, the person have decided to invest money to receive a monthly payment, meaning no savings and the adequacy of using the simple interest formula:

g = C · (r/100)     (1)

Where:

  • C - Invested money, in monetary units.
  • r - Monthly interest rate, in percentage.
  • g - Monthly payment, in monetary units.

If we know that g = 1500 and r = 3.1/12, then the invested money must be:

C = 100 · g/r

C = 100 · [1500/(3.1/12)]

C = 580645.16

Given the possibility of an investment with an annual interest rate of 3.1 %, the person must deposit $ 580645.16 to receive monthly payments of $ 1500 for 20 years.

To learn more on interest rates: https://brainly.com/question/13735414

#SPJ1

We appreciate every question and answer you provide. Keep engaging and finding the best solutions. This community is the perfect place to learn and grow together. IDNLearn.com is your go-to source for accurate answers. Thanks for stopping by, and come back for more helpful information.