Calculation of Payment for an Annuity

Given:
Annuity amount: $2000
Interest rate: 6% per annum, compounded monthly
Duration: 2 years

Formula:
The formula for the calculation of the payment for an annuity is:

P = A / (((1 + r)^n - 1) / (r(1 + r)^n))

where,
P = Payment for an annuity
A = Annuity amount
r = Interest rate per period
n = Total number of periods

Calculation:
Since the annuity payments are to be made monthly for 2 years, the total number of periods would be 24 (12 months in a year x 2 years).
The interest rate per period would be 6% / 12 = 0.5%.

Substituting the values in the formula, we get:

P = 2000 / (((1 + 0.005)^24 - 1) / (0.005(1 + 0.005)^24))
P = $91.70 (rounded off to two decimal places)

Therefore, each payment for the annuity would be $91.70.

Explanation:
An annuity is a financial product that provides a series of payments to the investor over a specified period. The calculation of the payment for an annuity depends on the annuity amount, the interest rate, and the duration. The formula for the calculation of the payment for an annuity is used to determine the amount of each payment that needs to be made to the investor.

In this case, the annuity amount is $2000, the interest rate is 6% per annum, compounded monthly, and the duration is 2 years. By substituting these values in the formula, we can calculate the payment for the annuity, which comes out to be $91.70.

It is important to note that the interest rate per period needs to be calculated by dividing the annual interest rate by the number of periods in a year. In this case, since the annuity payments are to be made monthly, the interest rate per period is 0.5%.

Overall, the calculation of the payment for an annuity is a simple and straightforward process that involves using the formula and substituting the values.