Question

Great Dish believes that it will need new equipment in 8 years. The equipment will cost $26,000. What lump sum should be invested today at 12%, compounded semiannually, to yield $26,000? a. $20,186.02 c. $16,388.00 b. $16,145.82 d. $10,234.80

Answer 1

Answer:

d. $10,234.80

Step-by-step explanation:

we are given

The equipment will cost $26,000

so, Amount is $26000

A=26000

should be invested today at 12%

r=12%=0.12

It is compounded semiannually

so, n=2

t=8

now, we can use formula

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

now, we can plug values

$26000=P(1+\frac{0.12}{2})^{2\times 8}$

now, we can solve for P

$P=10234.80338$