An investor deposits 17

Finance Dec 05, 2020

An investor deposits 17.773 every end of 6 months in a bank which offers an interest of manually for time deposits Computerwow much the stor con collect the end of 15 years the ver window any amount found off answers to decimapaces

Expert Solution

Answer : Calculation of Value at the end of 15 years :

Calculation of Future value of Annuity

Future Value of Annuity = Periodic Payment * {[(1+ r)^n - 1 ] / r }

where

rate of interest per period is 6.1% or 0.061 / 2 = 0.0305(Divided by 2 as compounded semiannually)

n is the number of periods i.e 15 * 2 = 30 (Multiplied by 2 as compounded semiannually)

Periodic payment is 17773

Future Value of Annuity = 17773 * {[(1+ 0.0305)^30 - 1 ] / 0.0305 }

= 17773 * { 1.462860897 / 0.0305}

= 17773 * 47.96265236

= 852440.22

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