Jeff desires to accumulate $13,603.83 by December 1, 2018. To accumulate that sum, he will make six equal semiannual deposits of $2,000, beginning on June 1, 2016, into a fund that earns interest compounded semiannually. What annual rate of interest must the fund provide to yield the desired sum?
A) 5%
B) 6%
C) 10%
D) 12%

Question

Quizplus · Accepted Answer

The future value of the annuity is given by:FV = P * [(1 + r/2)^(2n) - 1] / (r/2)where:P is the amount of each depositr is the annual interest raten is the number of depositsSubstituting the given values into the formula, we get:13,603.83 = 2,000 * [(1 + r/2)^(2*6) - 1] / (r/2)Solving for r, we get:r = 10%

Jeff Desires to Accumulate $13,603