Justin purchased an annuity that had an interest rate of 3.00% compounded semi-annually. It provided him with payments of $2,500 at the end of every month for 4 years. If the first withdrawal is to be made in 3 years and 1 month, how much did he pay for it?
Added by Alexandra F.
Step 1
The annuity pays $2,500 every month for 4 years, which is a total of 4 * 12 = 48 payments. The interest rate is 3.00% compounded semi-annually, so we need to find the equivalent monthly interest rate. To do this, we can use the formula: (1 + annual interest Show more…
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