Answer to Question #225428 in Financial Math for Amanpreet Kaur

Question

Jaspreet receives $3,200 from an investment at the beginning of every quarter for 7 years and 9 months at 4.94% compounded semi-annually. How many payments are there in this annuity (rounded up to the next payment)?

Answer 1

FV of annuity Due$=$ PMT$×$ $\frac {(1+r)^n-1}{r}$ $×(1+r)$

PMT$=$ periodic cashflows$($ $ 3200$)$

r$=$ Periodic interest rate$($ 4.94$/2)=0.0247$

n$=$ Total number of payments$($ 31quarters$)$

3200 $×$ $\frac {(1+0.0247)^{31}-1}{0.0247}$ $×$ $($1$+$0.0247)

Answer$=$ 150$,$ 090