Answered

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a. Use the appropriate formula to find the value of the annuity b. Find the interest.

A Use The Appropriate Formula To Find The Value Of The Annuity B Find The Interest class=

Sagot :

Answer:

The value of annuity is $65

The interest is $135

Explanation:

The parameters given are:

Value of each payment, P = $1500

Rate, r = 5.25%

Time, t = 7 years

The value of the annuity is:

[tex]\begin{gathered} V=P\times\frac{1-(1+r)^{-n}}{r} \\ \\ =1500\times\frac{1-(1+0.0525)^{-7}}{7} \\ \\ 1500\times\frac{1-(1.0525)^{-7}}{7} \\ \\ =64.5\approx65 \end{gathered}[/tex]

The interest is 1500 - 65*3*7 = $135

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