Question

Find the present value given the following:Amount needed: $9,350Time in years: 4Interest: 5%Compounded: semiannually

Answer 1

The amount is $9,350 ,time in years: 4 and interest is 5 percent compounded semiannually.

Use the formula.

$A=P(1+\frac{r}{n})^{nt}$

Here n =2 .

Substitute the values,

$9350=P(1+\frac{5}{100\times2})^{2\times4}$$9350=P(1+0.025)^8$$9350=P(1.025)^8$$P=\frac{9350}{1.2184}=7673.98\text{dollar}$

Hence the present value is 7673.98 dollar.