Question

1. Assume that you deposit $8,500 in each of years 1-16 in an
account yielding .7% interest compounded annually. 23 years from
today you withdraw $28,000 from the account. How much will be in
your account 30 years from today?

2. Determine the semi-annual deposits required to accumulate
$4,000 four years from today, given an annual interest rate of 12%,
compounded semi-annually. (Assume your deposits begin 6 months from
now and there are 8 total deposits)

Answer #1

for 16 years, EOY 16. It is:

= 8500*(1.07^16-1)/0.07 = $237,048.46

FV of the above amount at EOY 30 = 237048.06*1.07^14
= $611,236.52

Less: FV of the amount withdrawn = 28000*1.07^7 =
$44,961.88

Amount in the account 30 years from today
**$566,274.64**

2] Amount to be deposited today = 4000/1.06^8 =
**$2,509.65**

Note that the number of periods is 4*2 = 8 half years
&

the interest rate per period is 12%/2 =
6%.

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