Jamal plans to retire in 17 years. He is saving $2000 every month in a retirement savings account paying him a long-term interest of 9% compounded semi-annually. What will be the size of his payments per month from the ordinary annuity for 20 years following his retirement?

Question

Quizplus · Accepted Answer

To find the monthly payment from the annuity, first calculate the future value of the savings using the formula for future value of an ordinary annuity. Then, use the future value to find the monthly payment using the formula for the present value of an annuity. The correct monthly payment is approximately $8372.

Jamal Plans to Retire in 17 Years