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?

Answer 1

To find the number of payments Tom will receive from his retirement fund, we need to calculate the total value of the fund and divide it by the payment amount.

Step-by-step explanation:

Mathematics: Retirement Fund Payments

To find the number of payments Tom will receive, we need to calculate the total value of the retirement fund and then divide it by the amount of each payment. The retirement fund earns 8.25% compounded semi-annually, which means the effective annual interest rate is 8.25%/2 = 4.125%. Using the formula for the future value of an ordinary annuity, we can calculate the total value of the retirement fund:

Future Value = Payment Amount x [(1 + Interest Rate)^Number of Payments - 1] / Interest Rate

Plugging in the given values, we have:

90000 = 6000 x [(1 + 0.04125)^Number of Payments - 1] / 0.04125

Now we can solve this equation for Number of Payments.