Answer:
$6,046.40
Explanation:
First, find the PV of the $35,000 withdrawals annuity at the time of last investment(end of 18 years). This can be solved with a financial calculator using the following inputs;
Recurring semiannual withdrawals; PMT = 35,000
Total duration of withdrawals; N = 8*2 = 16
Semiannual Interest rate; I/Y = 7%/2 = 3.5%
One time cashflows ; FV = 0
Compute present value; PV(at yr18) = $423,294.088
Next , use the $423,294.088 as your FV goal at the end of year 18.
Future value at yr18; FV = $423,294.088
Total duration of deposits; N = 18*2 = 36
Semiannual Interest rate; I/Y = 7%/2 = 3.5%
One time cashflows ; PV = 0
Compute recurring payment; PMT = 6,046.402
Therefore, they need to invest $6,046.40 at the end of each 6-month period.
