Question

Barney Rubble wishes to withdraw $4000 at the end of every six month period for the next twenty years. How much must be deposited now into this account so that he can make these withdrawls? Assume the account earns 6% compounded semi annually.

Answer 1

$301605.038

Explanation:

Given :Barney Rubble wishes to withdraw $4000 at the end of every six month period for the next twenty years.

To Find:How much must be deposited now into this account so that he can make these withdrawls?

Assume the account earns 6% compounded semi annually.

Solution:

PMT = Each annuity payment = $4000

n = 2

t = 20

r= 6%= 0.06

Formula:
`FV=PMT[((1+(r)/(n))^(nt) -1)/((r)/(n))]`

`FV=4000[((1+(0.06)/(2))^(2 * 20) -1)/((0.06)/(2))]`

`FV=301605.038`

Hence He must deposit $301605.038 into this account so that he can make these withdrawals