Answer:
$301605.038
Step-by-step explanation:
Given :Barney Rubble wishes to withdraw $4000 at the end of every six month period for the next twenty years.
To Find:How much must be deposited now into this account so that he can make these withdrawls?
Assume the account earns 6% compounded semi annually.
Solution:
PMT = Each annuity payment = $4000
n = 2
t = 20
r= 6%= 0.06
Formula: [tex]FV=PMT[\frac{(1+\frac{r}{n})^{nt} -1}{\frac{r}{n}}][/tex]
[tex]FV=4000[\frac{(1+\frac{0.06}{2})^{2 \times 20} -1}{\frac{0.06}{2}}][/tex]
[tex]FV=301605.038[/tex]
Hence He must deposit $301605.038 into this account so that he can make these withdrawals
