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:

Market Segments

Subsets of a market made up of people or organizations with one or more characteristics that cause them to demand similar product and/or services based on qualities like needs, characteristics, or behaviors.

Excessive Costs

Costs that exceed the expected or budgeted amount, often leading to financial strain for a business.

Segmentation Variables

Criteria used to divide a market into smaller segments, based on characteristics such as demographics, psychographics, geography, or behavior.

Market-product Grid

A matrix used to analyze and display the relationship between different markets and products, identifying opportunities.