What semi-annual compounded nominal rate of return is required to return $5,000 every six months if the perpetuity fund is $265,000?

Semi-annual compounded

Interest on an investment is calculated twice a year and added to the principal.

Nominal rate

The stated or face interest rate on a loan or investment, not adjusted for inflation or the frequency of compounding.

Assess the financial value of annuities and perpetuities, taking into account various types like ordinary annuities, annuities due, deferred annuities, and perpetuities under different compounding conditions.
Use compound interest equations to tackle challenges in the areas of savings, loans, and investments.

Verified Answer

Final Answer :

3.77% compounded semi-annually

Learning Objectives

Assess the financial value of annuities and perpetuities, taking into account various types like ordinary annuities, annuities due, deferred annuities, and perpetuities under different compounding conditions.
Use compound interest equations to tackle challenges in the areas of savings, loans, and investments.