Monday

April 21, 2014

April 21, 2014

Posted by **Anonymous** on Wednesday, November 14, 2007 at 6:25pm.

How much money must be deposited now at 6% interest compounded semi-annually, to yelid an annuity payment of $4,000 at the beginning of each six-month peroid for a total of five years I need to then round my answer to the nearest cent

- Math -
**tchrwill**, Wednesday, November 14, 2007 at 7:24pmHow much money must be deposited now at 6% interest compounded semi-annually, to yelid an annuity payment of $4,000 at the beginning of each six-month peroid for a total of five years I need to then round my answer to the nearest cent

The present value of an annuity that willpay out $4000 at the end of every 6 month period (not including the first day of the 5 year period) paying 6% compounded semi-annually derives from P = R[1 - (1 + i)^-n)]/i where P = the present value, R = up front deposit, i = the decimal periodic interest rate, and n = the number of interest bearing periods.

Therefore, P = 4000[1 - (1 + .03)^10)]/.03 = $34, 121.

The present value of an annuity that will pay out $4000 at the beginning of every 6 month period paying 6% compounded semi-annually would be

P = 4000[1 - (1 + .03)^-9)]/.03 = $31,144 + $4000 = $35,144. In this case the present value loses $4000 at the start of the 5 year period before any interest is gained and only 9 interest bearing periods remain.

- Math -
**Anonymous**, Wednesday, March 13, 2013 at 5:13pmhi

**Related Questions**

williams pkwy - how much money must be deposited now @ 6 % interest compounded ...

math - find the present value of ordinary annuity payments of 890 each year for ...

Math - please check my answer thanks :) How much money must be deposited now, at...

Math - please check my answer thanks :) How much money must be deposited now at ...

Math - Please check my work, thank you If $7,800 is deposited into an account ...

Math - Meg's pension plan is an annuity with a guaranteed return of 9% interest ...

Business Finance - How much must be deposited now, at 6% interest compounded ...

Business Finance - How much must be deposited now, at 6% interest compounded ...

Math - The present value of an annuity due of $400 payable semi-annually is $...

math - Angie needs to have an annuity payment of $1,300 at the end of each year ...