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# Answer to Question #51312 in Finance for mohammed abdu

Question #51312
You have been accepted to study international economics at the International Banking College (IBC) in Kuala Lumpur. You will need RM10,500 every 6 months (beginning today) for the next three years to cover tuition and living expenses. Mom and Dad have agreed to pay for your education, and want to make one deposit today in a bank account earning 6% interest, compounded semiannually. How much must they deposit now so that you can withdraw RM10,500 at the beginning of each semester over the next 3 years?
1
2015-03-17T13:03:01-0400
You will need RM10,500 every 6 months for 3 years, 6% interest, compounded semiannually. To calculate how much they must deposit now so that you can withdraw RM10,500 at the beginning of each semester over the next 3 years we use the formula of annuity: PV = 10,500*(1 - 1.06^(-6))/0.06 = RM 51,631.91.

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