   Chapter 13.4, Problem 13E ### Algebra and Trigonometry (MindTap ...

4th Edition
James Stewart + 2 others
ISBN: 9781305071742

#### Solutions

Chapter
Section ### Algebra and Trigonometry (MindTap ...

4th Edition
James Stewart + 2 others
ISBN: 9781305071742
Textbook Problem

# APPLICATIONSFunding an Annuity How much money must be invested now at 9 %   per year, compounded semiannually, to fund an annuity of 20 payments of $200 each, paid every 6 months, the first payment being 6 months from now? To determine To find: The amount of money that must be invested at 9% per year, compounded semiannually. Explanation Given: The interest per year is, i=9% Number of semiannual payments is, n=20 The payment R is, R=$200

Approach:

The present value Ap of an annuity consisting of n regular payments of size R and interest rate

ipertimeperiod is given by,

Ap=R1(1+i)ni ... (1)

Calculation:

The interest per year compounded semiannually is given by,

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