Question

Find the least amount that could be deposited in a bank account today at \( 8 \% \) compounded semiannually to allow \( \$ 1875 \) withdrawals at the end of each 6 months for 11 years?

Answer 1

Explanation:

Here i = 8 % compounded semiannually i.e 8 / 2 = 4 % or 0.04Now,A = 1875 * [ { ( 1.04 ) 22 - 1 } / { 0.04 } * {1.04 ) 22 } ]= 1875 * [ { 2.3699 - 1} / { 0.04 * 2.3699 } ]= $ 27096The least amount that can be deposited today is $ 27096.