Concept explainers
Annuity Find the amount of an annuity that consists of 20 annual payments of $5000 each into an account that pays interest of 12% per year.
The amount of an annuity for the given data.
Answer to Problem 5E
The amount of an annuity is $360,262.21.
Explanation of Solution
The amount of annuity is a sum of all individual payment which is paid for given period with interest. Annuity is sum of money which paid in regular equal payment.
Formula:
Amount of annuity formula is
Where,
A = amount of annuity
i = interest rate
n = period
R = regular equal payment
Calculation:
Given information:
Annual payment (R) = $5,000
Interest rate (i) = 12%
Period (n) = 20
Therefore, the amount of an annuity is $360,262.21.
Chapter 12 Solutions
Precalculus: Mathematics for Calculus - 6th Edition
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