Susan wants to save money to buy a motorcycle. She invests in an ordinary annuity that earns
How much money will she need to pay into the annuity each quarter for the annuity to have a total value of
Final Answer: Susan will need to pay approximately $253.41 into the annuity each quarter for the annuity to have a total value of $7000 after 6 years. So, the final answer is
Step 1 :Susan wants to save money to buy a motorcycle. She invests in an ordinary annuity that earns 4.8% interest, compounded quarterly. Payments will be made at the end of each quarter. She wants the annuity to have a total value of $7000 after 6 years.
Step 2 :We need to find out how much money she will need to pay into the annuity each quarter.
Step 3 :We can use the formula for the future value of an ordinary annuity:
Step 4 :We can rearrange this formula to solve for
Step 5 :Substituting the given values into the formula, we get:
Step 6 :Solving this equation, we find that
Step 7 :Final Answer: Susan will need to pay approximately $253.41 into the annuity each quarter for the annuity to have a total value of $7000 after 6 years. So, the final answer is