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Tabby Soft believes that it will need new equipment in 5 years. The equipment will cost $26,000. What lump sum should be invested today at 6%, compounded semiannually, to yield $26,000? a. $22,558.87 c.
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Tabby Soft believes that it will need new equipment in 5 years. The equipment will cost $26,000. What lump sum should be invested today at 6%, compounded semiannually, to yield $26,000? a. $22,558.87 c. $22,390.94 b. $23,948.47 d. $19,346.44

User Shien Hong
by
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2 Answers

6 votes

Answer:

D

Step-by-step explanation just put D

User Kamgman
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7.7k points
4 votes
The following compounding formula applies:
A = P (1+R/2)^2t

Where, A = Amount after 5 years = $26,000; P = Amount invested now; R = Annual rate of earning = 6% = 0.06; t = time = 5 years.

Substituting;
26000 = P(1+0.06/2)^2*5 = P(1.3439)

Therefore, P = 26000/1.3439 = $19,346.44

The correct answer is d.
User Olsydko
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9.1k points
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