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What must Abdu invest today to...

What must Abdu invest today to receive an annuity of $9,000 for four years semiannually at an 8% annual rate? All withdrawals will be made at the end of each period.

User Moonhead
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1 Answer

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Final answer:

Abdu must invest $34,489.53 today to receive an annuity of $9,000 for four years semiannually at an 8% annual rate.

Step-by-step explanation:

To find the amount Abdu must invest today to receive an annuity of $9,000 for four years semiannually at an 8% annual rate, we can use the formula for the present value of an annuity:

PV = PMT x (1 - (1 + r)^(-n)) / r

Where PV is the present value, PMT is the annuity payment, r is the interest rate per period, and n is the number of periods.

Plugging the given values into the formula, we get:

PV = $9,000 x (1 - (1 + 0.08/2)^(-4x2)) / (0.08/2) = $34,489.53

User Vitalym
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