Posted by Anonymous on Tuesday, November 27, 2007 at 9:52am.
You say your answer is D, but don't show a "D"
If you did
Present Value = 4000(1 - 1.03^(-10)/.03
= 34120.81
then you were correct.
I mean I got $29,440.36
The only choice I have are $38,120.80
35,144.44 0r $29,440.36
How much money must be deposited now, at 6% interest compounded semiannually to yield an annuity payment of $4,000 at tha beginning of each six-month period,for a total of five years? Round your answer to the nearest cent.
A. $38,120.80
B. $35,144.44
C. $29,440.36
My answer is D
Not knowing what D is, it is difficult to assess whether you are correct or not.
Since the payments are made at the "beginning" of each 6 month period, the formula must be adjusted to
P = R + R[1 - (1+i)^n] where i = .o6/2 = .03 and n = 1 period less than 5(2) = 9.
Therefore, P = 4000 + 4000[1-(1.03)^-9]/i = $35,144.44 making B your correct choice.
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