An engineering college want to create a $81,580 annual fund for course textbooks each semester during...
An engineering college want to create a $81,580 annual fund for course textbooks each semester during the regular school. If the fund has a 1.8% nominal interest rate compounded biannually, how much must be in the fund to start to keep it going indefinitely?
Homework Answers
Effective annual rate of a nominal biannual rate =
(1+2*r)1/2 -1 = (1+2*1.8%)1/2 -1 =
1.7841%
Amount of fund required to keep it going indefinitely =
81,580/1.7841% = 4,572,613.64
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