question archive Robert wants to have an annuity payment of $800, at the end of each six months
Robert wants to have an annuity payment of $800, at the end of each six months
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Robert wants to have an annuity payment of $800, at the end of each six months. Use the appropriate formula to find how much he should deposit (in $) now at 6% interest, compounded semiannually, to yield this payment for 18 years. (Round your answer to the nearest cent.)
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Use the PV annuity formula.
P = amount to deposit now = ?
A = periodic payment = 800
n = number of periods = 18 x 2 = 36
r = periodic rate = 0.06/2 = 0.03
P = A x (1-(1+r)-n) / r
P = 800 x (1-(1+0.03)-36) / 0.03
P = 17465.80
