Answer:
$10,000 divided by the future amount of an ordinary annuity of 40 payments of $1 each at an interest rate of 3% per period.
Explanation:
given data
semiannual payments = $10,000
time period = 20 year
annual rate = 6%
solution
The question has future value because it calculates the periodic amount of the annual amount that must be invested to produce the given amount in the future.
Accordingly, the appropriate factor showing the effect of compound interest is derived from the formula for the future value of the common annuity of $1
This factor multiplied by the periodic payment is equal to the future amount. If the payment is unknown, the future amount of the regular annuity formula can be calculated by dividing the future amount ($ 10,000) by the appropriate factor obtained.
when payment is made semiannually for 20 years,
then 40 compounding period is involved.
If the interest rate is 6% the semiannual interest rate is 3%.
