An annuity purchased for $175,000 pays $4,000 at the end of every quarter. How long will the payments continue if the funds earn 7% compounded semi-annually?

Compounded Semi-Annually

The calculation of interest on a principal sum twice a year, effectively increasing the amount on which future semi-annual interest payments are calculated.

Annuity

An investment vehicle that delivers a steady flow of payments to a recipient, predominantly designed to be a revenue stream for retired persons.

Examine the conditions and financial returns of annuities, considering factors such as the initial investment amount, interest rates, and compounding intervals.

Verified Answer

Kayla MurrayMay 24, 2024

Final Answer :

20 years and 9 months

Learning Objectives

Examine the conditions and financial returns of annuities, considering factors such as the initial investment amount, interest rates, and compounding intervals.

An annuity purchased for $175,000 pays $4,000 at the end of every quarter. How long will the payments continue if the funds earn 7% compounded semi-annually?

Definitions

Learning Objectives

Learning Objectives

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