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Retirement Planning: To supplement her pension in the early years of retirement, Lucy plans to ise $200,000 of her savings as an ordinary annuity
Retirement Planning: To supplement her pension in the early years of retirement, Lucy plans to ise $200,000 of her savings as an ordinary annuity that will make monthly payments to her for 20 years. If the interest rate is 5.0%, how much will each payment be? PV=PMT -(1+0) Present Value of an Ordinary Annuity The present value PV of an ordinary annuity is given by PVPMT or PV = PMT a where PMT is the payment at the end of each period: i-r/m is the interest rate per period, r is the annual interest rate, m is the number of periods per year, and n is the total number of periods
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