Question

hat semiannual annuity payment is needed to have $500,000 in 15 years if the annuity pays 6.3% interest

Answer 1

The required semiannual annuity payment is $10,256.72

What is future value of an annuity?

The future value of an annuity is the accumulated amount in the future that could be achieved by making a fixed periodic savings, it is a semiannual fixed payment that is required in this case.

The future value formula for an ordinary annuity provided below can be used to determine the semiannual payment needed:

FV=PMT*(1+r)^N-1/r

FV=future value=$500,000

PMT=semiannual payment required=unknown

r=semiannual interest rate=6.3%/2=3.15%=0.0315

N=number of semiannual payments in 15 years=15*2=30

$500,000=PMT*(1+0.0315)^30-1/0.0315

$500,000=PMT*(1.0315)^30-1/0.0315

$500,000=PMT*(2.53557796686568000-1)/0.0315

$500,000=PMT*1.53557796686568000/0.0315

PMT=$500,000/1.53557796686568000*0.0315

PMT=$10,256.72

Find out more about future value of an ordinary annuity on:brainly.com/question/14761171

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