Solve the problem. Round to the nearest cent.
-Larry wants to start an IRA that will have $620,000 in it when he retires in 26 years. How much should he invest semiannually in his IRA to do this if the interest is 6% compounded semiannually?
A) $5094.65
B) $3969.83
C) $16,081.74
D) $5081.65

Question

Quizplus · Accepted Answer

To find the semiannual investment, we can use the formula for the future value of an annuity:FV = P * [(1 + r/n)^(n*t) - 1] / (r/n)where:FV is the future valueP is the semiannual investmentr is the annual interest rate (6%)n is the number of compounding periods per year (2)t is the number of years (26)Substituting the given values, we get:620000 = P * [(1 + 0.06/2)^(2*26) - 1] / (0.06/2)Solving for P, we get:P = 620000 * (0.06/2) / [(1 + 0.06/2)^(2*26) - 1]P = $5094.65 (rounded to the nearest cent)Therefore, the correct answer is A) $5094.65.

Solve the Problem. Round to the Nearest Cent