Question

Find the amount necessary to fund the given withdrawals. Semiannual withdrawals of 850 for 6 years,interest rate is 4.7% compounded semiannually.

Answer 1

The amount necessary to fund the withdrawal is $8798.820

Explanation:

Here, we are interested in calculating the necessary amount to fund the withdrawal given in the question.

From the question, we can identify the following;

Principal amount, P= $850

Here, Period rate, i = 0.047/ 2 =0.0235

n = 6*2 = 12

Mathematically;

Present Value of an annuity, Ao=P* [1-(1+i)^{-n}]/i

Ao=850* [1-(1+0.0235)^{-12}] /0.0235

Ao = $8798.820