Question

Carol wants to invest money in a 6% CD account that compounds semiannually. Carol would like the account to have a balance of $50,000 five years from now. How much must Carol deposit to accomplish her goal

Answer 1

Answer:

PV= $37,204.70

Explanation:

Giving the following information:

Interest rate= 6% compounded semiannually= 0.03

Future value= $50,000

Number of periods= 5*2= 10

To calculate the initial investment to reach the objective, we need to use the following formula:

PV= FV/(1+i)^n

PV= 50,000/(1.03^10)

PV= $37,204.70