You are chairperson of the investment fund for the Continental Soccer League. You are a

| October 3, 2018

You
are chairperson of the investment fund for the Continental Soccer League. You
are asked to set up a fund of semiannual payments to be compounded
semiannually to accumulate a sum of $220,000 after 9 years at an 12 percent
annual rate (18 payments). 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 9th year. Use.mhhe.com/connect/0073530727/Images/Appendix_A.JPG”>Appendix A and.mhhe.com/connect/0073530727/Images/Appendix_C.JPG”>Appendix C.

(a)

Determine
how much the semiannual payment should be. (Round
“FV Factor” to 3 decimal places and final answer to the nearest
dollar amount. Omit the “$” sign in your response.)

Semi-annual payment

$

On
the day after the sixth payment is made (the beginning of the fourth year)
the interest rate goes up to a 14 percent annual rate, and you can earn a 14
percent annual rate on funds that have been accumulated as well as all future
payments into the fund. Interest is to be compounded semiannually on all
funds.

(b)

Determine
how much the revised semiannual payments should be after this rate change
(there are 12 payments and compounding dates). The next payment will be in
the middle of the fourth year. (Round
“FV Factor” to 3 decimal places, intermediate and final answer to
the nearest dollar amount. Omit the “$” sign in your response.)

Revised semi-annual
payments

$

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