The amount of each annuity payment is $7,546.70
Buying an annuity may want to mean laying greater to cover the top rate. If buying an annuity could drain your liquid savings and positioned you prone to having to borrow to pay for surprising fees, it is able to now not be well worth it. An annuity is a contract between you and an insurance organization in that you make a lump-sum charge or series of bills and, in go back, get hold of regular disbursements, starting both at once or at some point within the future.
Formula for annuity due is given below:
Present value = (1+rate) * annuity payment * [tex]\frac{1 - \frac{1}{(1+ rate)^n} }{rate}[/tex]
Let annuity payment be X.
Rate = 6%/2 = 3%
N = 25*2 = 50
200,000 = (1+0.03) * X * [tex]\frac{1 - \frac{1}{(1+ 0.03)^n} }{0.03}[/tex]
Solving, we get X = annuity payment = 7,546.70
Hence, Annuity payment is $7,546.70
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