Question

What is the size of the payments that must be deposited at the beginning of each 6-month period in an account that pays 9.8%, compounded semiannually, so that the account will have a future value of $160,000 at the end of 19 years? (Round your answer to the nearest cent.)

Answer 1

Payment required	=		FV*r /[(1+r)^n -1] * 1/(1+r)
Future value	FV		160,000.00
Rate per period	r
Annual interest			9.8%
Number of payments per year			2.00
Interest rate per period			0.098/2=
Interest rate per period			4.900%
Number of periods	n
Number of years			19.000
Payments per year			2
number of payments			38
Payment	=		160000*0.049/ [(1+0.049)^38 -1] *1/(1+0.049)
	=		1,448.85

Amount to deposit each period is $1,448.85

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