Find the periodic payment which will amount to a sum of $15000 if an interest rate 8% is compounded annually at the end of 9 consecutive years.

Lorelei Patterson

Lorelei Patterson

Answered question

2022-07-29

Find the periodic payment which will amount to a sum of $15000 if an interest rate 8% is compounded annually at the end of 9 consecutive years.

Answer & Explanation

akademiks1989rz

akademiks1989rz

Beginner2022-07-30Added 16 answers

Formula for calculating compound interest:
A = P ( 1 + r n ) n t
Where,
P =principal amount (initial investment)
r =annual nominal interest rate (as adecimal)
n =number of times the interest is compounded peryear
t =number of years
A =amount after time t
According to thequestion,
A =15000$, r = 8% = 0.08, t = 9yrs, n =1.
so,
15000 = P ( 1 + 0.08 / 1 ) 1 9 = P ( 1.008 ) 9
P = 15000 / ( 1.008 ) 9 = 13962.06 $
Answer: 13962.06$

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