Randy bought an annuity to pay him $2700.00 at the end of every six months for twenty years. How much of the total annuity payments is interest, if interest is 6.5% p.a. compounded semi-annually?

Question

Quizplus · Accepted Answer

The Answer is PV_n = 2700.00 PV<sub>n</sub> = 2700.00 = 2700.00(22.2084332) = $59 962.77 Interest = 2700.00(40) - 59962.71 = 108000.00 - 59962.77 = $48 037.23

= 2700.00(22.2084332) = $59 962.77
Interest = 2700.00(40) - 59962.71 = 108000.00 - 59962.77 = $48 037.23

Randy Bought an Annuity to Pay Him $2700