Question

Stan wants to start an IRA that will have $250,000 in it when he retires in 25 years. How much should he invest semiannually in his IRA to do this if the interest is 6% compounded semiannually? Assume an Annuity Due. Round to the nearest cent.

Answer 1

25 years: No Payment, but total is 250000 6 months earlier. Payment of "P". It's value 1/2 year later is P(1+0.03) 6 months earlier. Payment of "P". It's value 1 year later is P(1+0.03)^2 6 months earlier. Payment of "P". It's value 1½ years later is P(1+0.03)^3 6 months earlier. Payment of "P". It's value 2 years later is P(1+0.03)^4 We need to recognize these patterns. Similarly, we can identify the accumulated value of all 50 payments of "P". Starting from the last payment normally is most clear. P(1.03) + P(1.03)^2 + P(1.03)^3 + ... + P(1.03)^50 That needs to make sense. After that, it's an algebra problem. P[(1.03) + (1.03)^2 + (1.03)^3 + ... + (1.03)^50] P1.03−1.03511−1.03=250000
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If you understand plz brainlest
This is pretty easy if you know the formula :)
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