Answer:
We have to set aside $5765.90 to earn what we want
Step-by-step explanation:
This is a compound interest problem
Compound interest formula:
The compound interest formula is given by:
A: Amount of money(Balance)
P: Principal(Initial deposit)
r: interest rate(as a decimal value)
n: number of times that interest is compounded per unit t
t: time the money is invested or borrowed for
Here, we want our amount after 2 years to be $6,000, with interest rate at two percent and semi annually compounding. So:
A = 6,000
P = Present value, we have to find
r = 0.02
n = 2. Semi annually compounding means that the compounding happens twice a year.
t = 2.
So:
We have to set aside $5765.90 to earn what we want