Answer :
Answer: $ 2898.55
Step-by-step explanation:
The formula to calculate the periodic payment on an annuity is given by :-
[tex]P=\dfrac{r(PV)}{1-(1+r)^{-n}}[/tex], where PV is the present value , r is the rate of interest and n is the time period.
Given : Present value : $18000
Rate of interest = 6%=0.06
Time period = 8 years
Then , the periodic payment will be :-
[tex]P=\dfrac{(0.06)(18000)}{1-(1+0.06)^{-8}}\\\\\Rightarrow\ P=\dfrac{1080}{0.3726}\\\\\Rightarrow\ P=\$2898.55[/tex]
Hence, the periodic payment is $ 2898.55.
The periodic payment that will amount to $18,000 at a 6% interest rate compounded annually for 8 consecutive years is $1,818.65.
What is a periodic payment?
A periodic payment is a series of cash invested periodically to arrive at a future value.
The periodic payment can be computed using an online finance calculator as follows:
Data and Calculations:
N (# of periods) = 8 years
I/Y (Interest per year) = 6%
PV (Present Value) = $0
FV (Future Value) - $18,000
Results:
PMT = $1,818.65
Sum of all periodic payments = $14,549.20 ($1,818.65 x 8)
Total Interest $3,450.80
Thus, the periodic payment that will amount to $18,000 at a 6% interest rate compounded annually for 8 consecutive years is $1,818.65.
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