Determine the constant semi-annual interest rate

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Consider an investment of 512000 that earns the following interest rates: 4% per year, compounded annually in years 1-2; 7% per year, compounded quarterly in years 3 through 5; and 5% per year, compounded semi-annually in years 6 through 10. Assume no withdrawals are taken prior to the end of year 10, at which time the entire account is depleted. If the same initial investment could be invested at a constant semi-annual interest rate (compounded semi-annually) over the same 10-year period and result in the same withdrawal amount at the end of year 10, determine the constant semi-annual interest rate needed.

Reference no: EM133181421

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