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

d. $10,234.80

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+(r)/(n))^(nt)`

now, we can plug values

`26000=P(1+(0.12)/(2))^(2* 8)`

now, we can solve for P

`P=10234.80338`