Question

you just retired and will receive pension payments of $6000.00 at the end of every six months from a retirement fund of $90 000.00. the fund earns 8.25% compounded semi-annually. how many payments will tom receive? question 12 options: 10.54 23.36 46.72 4.3 23.85 24.31 23.11

Answer 1

To find out how many payments Tom will receive, we can use the formula for the number of compounding periods.

Step-by-step explanation:

To find out how many payments Tom will receive, we need to calculate the number of compounding periods required to deplete the retirement fund. The formula we can use to calculate the number of compounding periods is:

n = log1+r (A/P) / log1+r(1+i)

Where:

1. n is the number of periods
2. A is the future value of the retirement fund ($90,000.00)
3. P is the semi-annual payment amount ($6,000.00)
4. r is the semi-annual interest rate (8.25%)
5. i is the interest rate per period (8.25% / 2 = 4.125%)

Using these values, we can calculate:

n = log1.04125 (90000/6000) / log1.04125(1.04125)

n ≈ 23.36

Therefore, Tom will receive approximately 23.36 pension payments.