Question

Question 10

Answer 1

Answer:

$83,320

Step-by-step explanation:

The formula to apply here is;

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

where;

A=Amount at the end

P=the amount to invest/principal

r=rate of interest as a decimal

n=number of compoundings in a year

t=time in years

Given that;

A=$400,000

P=?

r=8%=0.08

n=2

t=20

Substitute values in equation

$A=P(1+\frac{r}{n} )^{nt} \\\\\\400,000=P(1+\frac{0.08}{2} )^{2*20} \\\\\\400,000=P(1+0.04)^{40} \\\\\\\\400,000=P(1.04)^{40} \\\\\\400,000=P(4.80102062794)\\\\\\\\\frac{400,000}{4.80102062794} =\frac{4.80102062794P}{4.80102062794} \\\\\\83315.617=P$

P=$83,320 (to the nearest dollar)