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I understand the problem in this way:
How much money should Susan deposit today in the morning to pay $1400 semiannually to her granddaughter
for 10 years starting from today at the afternoon for known goal ...
. . . and so on . . .
Solution
Use the general formula X = .
In this case the withdrawal semi-annual rate is W = $1400, the semi-annual effective compounding rate
is r = 0.06/2 = 0.03, p = 1 + 0.03 = 1.03, the number of payment periods is n = 10*2 = 20. So
X = = 21,453.32 dollars. ANSWER
ANSWER. To provide her goal, Susan should deposit $21,453.32 dollars today at this account.
Solved.
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See my lessons in this site associated with annuity saving plans and retirement plans
- Ordinary Annuity saving plans and geometric progressions
- Annuity Due saving plans and geometric progressions
- Solved problems on Ordinary Annuity saving plans
- Withdrawing a certain amount of money periodically from a compounded saving account (*)
- Miscellaneous problems on retirement plans
and especially lesson marked (*) in the list as the most relevant to the given problem.
These lessons contain all necessary theory, clear explanations and tens of examples.
Happy learning (!)