Find how much should be deposited now at 8% interest, compounded semiannually, to yield an annuity...
Find how much should be deposited now at 8% interest, compounded semiannually, to yield an annuity payment of $700 at the BEGINNING of each 6 months, for 2 years
Homework Answers
Semi-annual interest = 8%/2 = 4%
Number of periods = 2*2 = 4
Amount to be deposited today is equal to present value of withdrawals
= 700 + 700*PVAF(4%, 3 periods)
= 700 + 700*2.7751
= $2,642.57
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