A 5-year deferred annuity makes quarterly payments beginning 2¼ years from now. If the present value...

A 5-year deferred annuity makes quarterly payments beginning 2¼ years from now. If the present value of the annuity is $5,900,000 and the discount rate is 3.17 percent compounded quarterly, what are the quarterly payments? using excel worksheet

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Expert Solution

Annuity makes quarterly payments after 2 years 3 months. Till then compounded interest will be added and after 2 years and 3 months payments will be done after every 3 months and interest will also be added.

Now Calculating the value of annuity after 2 years 3 months (using excel)

So after 2 years 3 months, the value of the annuity will be $6,332,993.15

Payments will be done after this for the next 11 quarters, and interest will also be added.

Using Excel to Calculate it.

So the quarterly payment will be $603,373.95

jeff jeffy answered 1 year ago

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