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blondinia [14]
3 years ago
9

Question 7 (2 points) Every six months, Jamison deposits $450 into an interest-bearing account to save for her children's tuitio

n. The interest rate on the account is 6.8% compounding semiannually. What is the present value of the investment if Jamison's children leave for college in 8 years? (2 points) a $4,600.84 b $4,307.90 c $5,483.45 d $5,669.89
Mathematics
1 answer:
cluponka [151]3 years ago
8 0

Answer:

PV= $5,483.45

Step-by-step explanation:

Giving the following information:

Semiannual deposit= $450

i= 0.068/2= 0.034

Number of periods= 8*2= 16

<u>First, we need to calculate the future value using the following formula:</u>

FV= {A*[(1+i)^n-1]}/i

A= semiannual deposit

FV= {450*[(1.034^16) - 1]} / 0.034

FV= $9,362.30

<u>Now, we can calculate the present value:</u>

PV= FV/(1+i)^n

PV= 9,362.30 / 1.034^16

PV= $5,483.45

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