An Annuity Providing a Rate of Return of 4

question 97

Essay

An annuity providing a rate of return of 4.8% compounded monthly was purchased for $45,000. The annuity pays $400 at the end of each month.
a) How much of the 37^th payment will be interest?
b) What will be the principal portion of the 92^nd payment?
c) How much interest will be paid by Payments 85 to 96 inclusive?
d) How much principal will be repaid in the fifth year?
e) What will be the final payment?

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Definitions:

Fruits

The seed-bearing structures in flowering plants formed from the ovary after flowering.

Cytoplasmic Division

This refers to the process during cell division where the cytoplasm of a single eukaryotic cell is divided into two daughter cells.

Megaspore

A large spore that develops into a female gametophyte in plant species that have alternation of generations, like ferns and flowering plants.

Haploid Nuclei

Nuclei containing a single set of chromosomes, typical of gametes in sexually reproducing organisms.