Retirement Annuity Problem
An investor wishes to set up a retirement annuity by making semiannual deposits into an account which offers an annual stated rate of 12 percent per year compounded semiannually. The first of these semiannual deposits will be made on his 25th birthday and the last on his 45th birthday. His goal is to be able to make annual withdrawals of $50,000 when he retires starting on his 65th birthday and continuing to his 85th birthday inclusive. Assume the account continues to offer 12 percent per year compounded semiannually throughout the entire period of deposits and withdrawals. What must be the amount of the semiannual deposits if this goal is to be achieved?