Steven wants to start an IRA that will have $375,263 in it when he retires in 30 years. How much should he invest quarterly in his IRA to do this if the interest is 5.5% compounded semiannually? Assume an Annuity Due. Round to the nearest cent.

Question

anonymous · Answer

@Hope_nicole

anonymous · Answer

$$A=P(1+\frac{r}{n})^{nt}$$ 

does this look familiar

anonymous · Answer

P is the principal value
r is the rate i believe
t is the time 
i cant remember what n is.

anonymous · Answer

n is total number of payments

anonymous · Answer

i got it...@Outkast3r09 that isn't the full formula...i just got the full formula from my notes i finally found

anonymous · Answer

actually we need something more

anonymous · Answer

we need
$$FV=C*(\frac{(1+i)^n-1}{i}$$

anonymous · Answer

that is it

anonymous · Answer

alright so we're looking for c

we know FV, we know i and we know n

SemiAnnually , semi is half therefore it's compounded 2 times a year

anonymous · Answer

sorry if i'm making bad sense of it... i'm not a business major and i basically am looking at a page for this

anonymous · Answer

n is number of times per year however since it's compounded i believe it has to be nt which is 60

anonymous · Answer

anyways if you solve for C

$$\frac{FV*i}{(1+i)^{60}-1}=C$$

anonymous · Answer

lifesaver :)