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A contract can be fulfilled by making an immediate payment of $5817, or equal payments at the end of every year for 5 years. What is the size of the annual payments at 5% per annum compounded quarterly?

          A contract can be fulfilled by making an immediate payment of $5817, or equal payments at the end of every year for 5 years. What is the size of the annual payments at 5% per annum compounded quarterly?
        

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Horngren’s Cost Accounting
Horngren’s Cost Accounting
Srikant M. Datar, Madhav V. Rajan 16th Edition
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A contract can be fulfilled by making an immediate payment of $5817, or equal payments at the end of every year for 5 years. What is the size of the annual payments at 5% per annum compounded quarterly?
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Transcript

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00:01 Alright, so for this problem we are going to want to find the size of our quarterly payments.
00:07 To do this we're going to use our compound interest formula where our final amount is going to equal p times 1 plus r to the n to the nt power.
00:22 Now, for our values for this, our p is our principal amount, which in this case is 4 ,265.
00:35 Our r is our interest rate, which we want to write as a decimal.
00:40 So our interest rate is 6%, which as a decimal is 0 .06.
00:46 Our n is the number of times that our interest rate is compounded per year.
00:53 So if it's compounded at the end of every 3 months, we know that it's going to be compounded 4 times because 12 divided by 3 is 4...
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