Asked by Sally

Andy has set up an ordinary annuity to save for his retirement in 16 years. If his semi-annual payments are $250 and the annuity has an annual interest rate of 7.5%, what will be the value of the annuity when he retires?

How do I solve this equation?

What steps do I take to solve it?

Thank You!
Answered by Anonymous
don't you have a formula for the future value of an annuity?
Answered by Sally
250[(1+.075/2)^16-1]
=.8022278066/(.075/2)
=21.39274151

250(21.39274151)
=5348.18

So, would 5348.18 by the answer?
Answered by Steve
good start, but 16 years means 32 payments.
Answered by Sally
Oh, okay

So, I would take 250[1+.075/2)^36-1
=.9517958171

.951795171(.07/4)
=50.76244358

650(50.76244358)

=32995.56 and this would be the answer?
Answered by Sally
Oops, I entered it wrong.

I would take
250[1+.075/2)^3-1

the answer would be 14986.93?
Answered by Elu
Yes
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