To determine the amount of each annual payment for the annuity, we need to use the formula for the present value of an ordinary annuity. The formula is:

$$ PV = PMT \times \left( \frac{1 - (1 + r)^{-n}}{r} \right) $$

Where:
- $ PV $ is the present value of the annuity (4860 dollars in this case).
- $ PMT $ is the annual payment.
- $ r $ is the annual interest rate (7.3% or 0.073).
- $ n $ is the number of payments (22).

We need to solve for $ PMT $. Rearranging the formula to solve for $ PMT $ gives us:

$$ PMT = PV \div \left( \frac{1 - (1 + r)^{-n}}{r} \right) $$

First, let's calculate the denominator:

$$ \frac{1 - (1 + r)^{-n}}{r} = \frac{1 - (1 + 0.073)^{-22}}{0.073} $$

Calculate $ (1 + 0.073)^{-22} $:

$$ (1.073)^{-22} \approx 0.239 $$

Now, substitute this back into the denominator:

$$ \frac{1 - 0.239}{0.073} = \frac{0.761}{0.073} \approx 10.424 $$

Now, we can find $ PMT $:

$$ PMT = 4860 \div 10.424 \approx 466.12 $$

Therefore, each annual payment is approximately 466.12 dollars.

Question

To determine the amount of each annual payment for the annuity, we need to use the formula for the present value of an ordinary annuity. The formula is:

$$ PV = PMT \times \left( \frac{1 - (1 + r)^{-n}}{r} \right) $$

Where:
- $ PV $ is the present value of the annuity (4860 dollars in this case).
- $ PMT $ is the annual payment.
- $ r $ is the annual interest rate (7.3% or 0.073).
- $ n $ is the number of payments (22).

We need to solve for $ PMT $. Rearranging the formula to solve for $ PMT $ gives us:

$$ PMT = PV \div \left( \frac{1 - (1 + r)^{-n}}{r} \right) $$

First, let's calculate the denominator:

$$ \frac{1 - (1 + r)^{-n}}{r} = \frac{1 - (1 + 0.073)^{-22}}{0.073} $$

Calculate $ (1 + 0.073)^{-22} $:

$$ (1.073)^{-22} \approx 0.239 $$

Now, substitute this back into the denominator:

$$ \frac{1 - 0.239}{0.073} = \frac{0.761}{0.073} \approx 10.424 $$

Now, we can find $ PMT $:

$$ PMT = 4860 \div 10.424 \approx 466.12 $$

Therefore, each annual payment is approximately 466.12 dollars.

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