You would like to have $3,500 in 4 years for a special vacation following graduation by making deposits at the end of every six months in an annuity that pays 5% compounded semiannually.
a. Use one of the formulas below to determine how much you should deposit at the end of every six months.
A = P[(1+r/n)ⁿᵗ −1] / (r/n) ; P = A(r/n) / [(1+r/n)ⁿᵗ −1]
