An engineer deposited her annual bonus of $10,000 into an account that pays interest at 8% per year, compounded semiannually. If she withdrew $1000 in months 2, 11, and 23, what was the total value of the account at the end of 3 years? Assume no interperiod compounding. (Note: See Problem 4.65 for additional analysis of this series.)
What will be an ideal response?
Move withdrawals to beginning of semiannual periods; find F
F = (10,000 – 1000)(F/P,4%,6) – 1000(F/P,4%,5) – 1000(F/P,4%,3)
= 9000(1.2653) – 1000(1.2167) – 1000(1.1249)
= $9046
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