Question
Annuity What is the present value of an annuity that consists of 20 semiannual payments of $\$ 1000$ at an interest rate of 9$\%$ per year, compounded semiannually?
Step 1
The annual interest rate is 9%, so the semiannual interest rate is 9%/2 = 4.5%. Show more…
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Find the future value of each annuity due. Then determine how much of this value is from contributions and how much is from interest. Payments of $\$ 1000$ made at the beginning of each semiannual period for 9 years at 8.15$\%$ compounded semiannually
Mathematics of Finance
Future Value of an Annuity
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