Find the value of annuity of a =$8000, I = 0.010, n =25
I have a quastion please.
You can use the annuity formula:
A= P (monthly pay out)
— * [1-(1+r)-t (number of months per years for the life of the pay out)]
r (rate or the interest per month)
Because you are getting paid $8,000 monthly for 12 months for 25 years the rate is .01 interest divided by 12 months. The time exponent is 12 months times the term of your annuity 25 years.
———— * [1-(1+.01/12)-(25*12)]
The annuity payment you have to pay is $2,122,734.07. Your total pay off for the next 25 years is $2,400,000. Multiply your total number of pay off years (25) by the number of months per each year (12) by your monthly pay off ($8000). 25*12*$8,000=$2,400,000
Sorry I copied the wrong value over for FV I actually got $225,945.60