Question

If you put up $39,000 today in exchange for a 6.5 percent, 16-year annuity, what will the annual cash flow be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

Answer:

$3,992.73

Explanation:

For computing the annual cash flow we need to apply the PMT formula i.e to be shown in the attachment below:

Given that,  

Present value = $39,000

Future value or Face value = $0

RATE = 6.5%

NPER = 16 years

The formula is shown below:  

= PMT(RATE;NPER;-PV;FV;type)  

The present value come in negative  

So, after applying the above formula, the annual cash flow is $3,992.73