Question
Answer the following questions: (a) To finance a vacation of $12,043.73 in the future, Lisa saves $650 at the beginning of every six months in
Answer the following questions:
(a) To finance a vacation of $12,043.73 in the future, Lisa saves $650 at the beginning of every six months in an account paying interest at 3.41% p.a. compounded semi-annually. How many semi-annual payments would it require for her account to grow to $12,043.73 when she takes the vacation? Show work.
(b) At the time when her account has $12,043.73, Lisa wants to be able to withdraw $1,710.00 at the end of each six months for 4 years while she travels until no balance remains in her account. What is the nominal rate of interest compounded quarterly at which $1,710.00 can be withdrawn from the account at the end of every six months until no funds remain? Show work.
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