A 20-year annuity is purchased for $400,000. What payment will it deliver at the end of each quarter if the undistributed funds earn:
a. 4% compounded quarterly?
b. 5% compounded quarterly?
c. 6% compounded quarterly?
d. 7% compounded quarterly?
In each case, also calculate the total earnings distributed over the life of the annuity. (Note that the total earnings increase proportionately more than the rate of return from one case to the next.)

Question

Quizplus · Accepted Answer

The Answer is a) $7287.54 & $183,003.20
b) $7938.61 & $235,088.80
c) $8619.33 & $66,861.80
d) $805.59 & $93,341.60

A 20-Year Annuity Is Purchased for $400,000