Asked by Nieajua Gonzalez on Jun 17, 2024
Verified
A $20,000 investment will be allowed to grow at 4.5% compounded semi-annually until it can support semi-annual withdrawals of $1,000 for 20 years. Rounded to the nearest month, how long before the first withdrawal must the investment be allowed to grow?
Compounded Semi-annually
A method of calculating interest where the earned interest is added to the principal balance twice a year, affecting the total interest earned over time.
Semi-annual Withdrawals
Withdrawals from an account or investment that occur twice a year.
- Evaluate the price of annuities and understand the influences on their valuation.
- Utilize compound interest strategies to deduce the future and present values of investments.
- Fathom the relationship between compounding frequency and the escalation of investment growth.
Verified Answer
VA
Learning Objectives
- Evaluate the price of annuities and understand the influences on their valuation.
- Utilize compound interest strategies to deduce the future and present values of investments.
- Fathom the relationship between compounding frequency and the escalation of investment growth.