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How much should Sara deposit twice a year at 10% compounded semi-annually for 3
1/2 years to have a $15,000 down payment for her own restaurant?

Respuesta :

sqdancefan

Answer:

  $1754.57

Step-by-step explanation:

We assume that Sara wants to make her deposits at the beginning of each 6-month period, so the formula for an annuity due is useful.

 A = P(1 +r/n)((1 +r/n)^(nt) -1)/(r/n)

For A = 15000, r = 0.10, n = 2, this becomes ...

  15000 = P·1.05(1.05^7 -1)/0.05 ≈ 8.54911P

  P = 15000/8.54911 ≈ 1754.57

Sara needs to make semiannual deposits of $1754.57 to accumulate $15000 in 3 1/2 years.

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