Question

Find the least amount that could be deposited in a bank account today at 10% compounded semiannually to allow $1875 withdrawals at the end of each 6 months for 12 years. Round to the nearest cent

A 26,426.14

B 25,872.45

C 49,127.55

D 25,291.07

Answer #1

Present Value =

where r is the rate of Return for compounding period = 10% /2 = 5% _ _ _ (Semi Annual)

n is the no of compounding period 12 years * 2 = 24 periods

=

= 1875 * 13.7986417958

= 25872.45

Option B is correct.

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