Steven wants to start an IRA that will have $375,263 in it when he retires in 30 years. How much should he invest semiannually in his IRA to do this if the interest is 5.5% compounded semiannually? Assume an Annuity Due. Round to the nearest cent.

There are 30 × 2 = 60 semiannual periods, and the interest rate per period is 5.5% ÷ 2 = 2.75%. For an annuity due, the future-value factor is [((1.0275)^60 − 1) ÷ 0.0275] × 1.0275, which is about 152.9014. Divide $375,263 by this factor to get a semiannual deposit of about $2,454.28, so the best answer is choice B, $2,454.28.

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