Question

Chris wants to accumulate $112,000 in 4 years. He plans on making equal semiannual deposits into an investment account that earns 10% semiannually in order to reach his goal. How much must Chris invest every six months

Answer 1

Answer:

$11,728.85

Explanation:

the future value of the annuity = $112,000

number of periods = 8 semiannual payments

interest rate = 10% compounded semiannually = 5%

future value = payment x FV annuity factor

FV annuity factor 5%, 8 periods = 9.5491

payment = $112,000 / 9.5491 = $11,728.85