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4. 10. 4 Test (CST):

Question 1 of 25

Nathan decides to invest $900,000

in a period annuity that earns 4. 8% APR

compounded monthly for a period of 20 years. How much money will Nathan

be paid each month?

O A. $5,769. 34

• B. $5,840. 62

• C. $5,697. 28

• D. $4,800. 00

SUBMIT

Sagot :

Parrain

Based on the value of the annuity, the amount it earns, and the compounding period, the money paid to Nathan each month will be B. $5,840.62.

How much will Nathan be paid monthly?

The amount Nathan will be paid is an annuity because it is constant.

First find the monthly interest and the compounding period in months:
= 4.8/12 months

= 0.4%

Number of compounding periods:

= 20 x 12

= 240 months

The monthly payment is:

Present value of annuity = Annuity x ( 1 - (1 + rate) ^ -number of periods) / rate

900,000 = A x ( 1 - (1 + 0.4%)⁻²⁴⁰) / 0.375%

900,000 = A  x 154.0932

A = 900,000 / 154.0932

= $5,840.62.

Find out more on the present value of an annuity at https://brainly.com/question/25792915.

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abiolataiwo2015

If APR is compounded monthly for a period of 20 years. The amount of money that Nathan will be paid each month is: B. $5,840. 62.

Monthly payment

Using the formula

PMT=PV÷[(1-(1+r/k)^(-kn))÷(r/k)]

Where:

Present value (pv)=$900,000

Interest rate (r)=4.8% or 0.048

Number of month (k)=12 months

Number of years (n)= 20 years

Let plug in the formula

PMT=900,000÷[(1−(1+0.048÷12)^(-12×20))÷(0.048÷12)]

PMT=900,000÷[(1−(1.004)^(-240))÷(0.004)]

PMT=900,000÷154.093

PMT=$5,840.62

Therefore the amount of money that Nathan will be paid each month is: B. $5,840. 62.

Learn more about monthly payment here:https://brainly.com/question/10042577

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