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 If a 11-year ordinary annuity has a present value of £160,000, and if the interest rate is 7 percent, what is the amount of each annuity pay

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If a 11-year ordinary annuity has a present value of £160,000, and if the interest rate is 7 percent, what is the amount of each annuity payment? An ordinary annuity is a series of equal payments made at the end of each year. (Round your answer to the nearest £).

 Nov 25, 2014

Best Answer 

 #1
avatar+394 
+5

Payment formula for ordinary annuities.

 

P= Payment per period (n).

PV= Present Valve. 

r =Rate per period.

P = r(PV)/(1-(1+r)-n)

 

0.07*(160000)/(1-(1+0.07)-11)=£21337.10

                                                 £21337

 

 _7UP_

 Nov 26, 2014

1+0 Answers

 #1
avatar+394 
+5
Best Answer

Payment formula for ordinary annuities.

 

P= Payment per period (n).

PV= Present Valve. 

r =Rate per period.

P = r(PV)/(1-(1+r)-n)

 

0.07*(160000)/(1-(1+0.07)-11)=£21337.10

                                                 £21337

 

 _7UP_

SevenUP Nov 26, 2014

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