An account paying 3.2% interest compounded semiannually has a balance of $32,675.12. Determine the amount that can be withdrawn from the account semiannually for 5 years. Assume ordinary annuity and round to the nearest cent.

For an ordinary annuity, the balance is the present value of the withdrawals: 32,675.12 = R[1 − (1 + 0.032/2)^−10]/(0.032/2). There are 10 semiannual withdrawals, and the interest rate per period is 0.016. Solving gives R ≈ $3,561.90, so the amount withdrawn semiannually is choice B, $3,561.90.

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