Question

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!

Answer 1

don't you have a formula for the future value of an annuity?

Answer 2

250[(1+.075/2)^16-1]
=.8022278066/(.075/2)
=21.39274151

250(21.39274151)
=5348.18

So, would 5348.18 by the answer?

Answer 3

good start, but 16 years means 32 payments.

Answer 4

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?

Answer 5

Oops, I entered it wrong.

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

the answer would be 14986.93?

Answer 6

Yes