Stan wants to start an IRA that will have $250,000 in it when he retires in 25 years. How much should he invest semiannually in his IRA to do this if the interest is 6% compounded semiannually? Assume an Annuity Due. Round to the nearest cent.

There are 25 × 2 = 50 semiannual deposits, and the interest rate per period is 6% ÷ 2 = 3%. For an annuity due, the future value factor is ((1.03^50 − 1) ÷ 0.03) × 1.03. Dividing the target $250,000 by that factor gives a semiannual investment of about $2,151.82, choice a.

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