Answer:
The answer is option A). $6,710.60
Step-by-step explanation:
The total amount Al miler will need to invest at the beginning to have the money in 15 years is known as the principal amount.
The formula for calculating the total amount after 15 years with interest compounded semiannually is as follows;
A = P (1 + r/n) (nt)
where;
A = the future value of the initial investment
P = initial investment amount/principal amount
r = the annual interest rate
n = the number of times that interest is compounded per unit t
t = the time the money is invested for
In our case;
A=$29,000
P=p
r=10/100=0.1
n=interest is compounded semiannually which is twice a year=2
t=15 years
Replacing values in the formula;
29,000=p(1+0.1/2)^(2×15)
29,000=p(1+0.05)^30
29,000=4.322 p
p=29,000/4.322
p=$6,710
Al must invest $6,710 for him to have enough money for the new equipment in 15 years