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    Compoundng Interest : Determining Amount to Deposit to get Desired Return

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    If I wanted to set up a trust earning 9% compounded semi-annually so that I could withdraw $10,000 every six months, begining six months from now, for 6 years. How would I determine the amount to deposit now?

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    Solution Preview

    Suppose I deposit x dollars, earning 9% compounded semi-annually interest.
    After 6 months, the balance is x(1+9%). And I withdraw $10,000.
    So the balance is ...

    Solution Summary

    The amount of a feposit to get a desired return under compounding interest is found. The solution is detailed.