Question
5.2 Suppose you are the chairperson of the investment fund for the Windhoek Cricket Club. You are asked to set up a fund of semi-annual
5.2 Suppose you are the chairperson of the investment fund for the Windhoek Cricket Club. You are asked to set up a fund of semi-annual payments to be compounded semi-annually to accumulate a sum of $200,000 after ten years at 8 %. The first payment into the fund is to take place six months from today, and the last payment is to take place at the end of the tenth year. Required: (a) Determine how much the semi-annual payment should be. (3 narks) (b) Suppose on the day after the sixth payment is made (the beginning of the fourth year) the interest rate goes up to a l0o/o, and you can earn a 10%o annual rate on funds that have been accumulated as well as all future payments into the fund. Interest is to be compounded semi-annually on all funds. Determine how much the revised semi-annual payments should be after this rate change
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