If you put in $100,000 in an life insurance company and start to receive the mon

Question

If you put in $100,000 in an life insurance company and start to receive the monthly payment for the next 10 years. The nominal annual interest rate is 8% compounded monthly, what is monthly income? 9. If you started today and borrowed $6,000 every 6 MONTH until the end of 4 YEARS (8 borrow periods in total) in a student loan which carrys a nomina! annual 3% interest rate compounded MONTHLY. After 4 years, you start to pay bac monthly over 10 year period. How much is your month payment? (period 0 $5,000, period 2 $$.000, period $5,000) 7

Explanation / Answer

9) Monthly income= P[i(1+i)^n] / [(1+i)^n-1]

P= 100000

i= 8% or 0.08

n= total no. Of months= 12*10= 120

Monthly income=

100000[0.08(1+0.08)^120] / [ (1+0.08)^120 -1]

= 8000.78

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