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Suppose payments were made at the end of each quarter into an ordinary annuity earning interest at the rate of 9%/year compounded quarterly. If the future value of the annuity after 8 yr is $80,000, what was the size of each payment?

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  1. i = .09/4 = .0225
    n = 4(8) = 32
    payment = P

    P( 1.0225^32 - 1)/.0225 = 8000

    solve for P

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