Asked by Anonymous
Ed long promised to pay is son $400 semiannually for 12 years. Assume Ed can invest his money at 6 % in an ordinary annuity. How much must Ed invest today to pay his son $400 semiannually for 12 years?
Answers
Answered by
Reiny
i = .06/2 = .03
n = 24
Present value = 400(1 - 1.03^-24)/.03
= ....
you do the button-pushing
n = 24
Present value = 400(1 - 1.03^-24)/.03
= ....
you do the button-pushing
Answered by
Bethany Ann
12 years x2 =24periods
6%/2=3%
24 periods @3%
400 x 16.9355= $6,774.20
6%/2=3%
24 periods @3%
400 x 16.9355= $6,774.20
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