Question

Find the present value given the following:Amount needed: $9,350Time in years: 4Interest: 5%Compounded: semiannually

Answer 1

The amount is $9,350 ,time in years: 4 and interest is 5 percent compounded semiannually.

Use the formula.

`A=P(1+(r)/(n))^(nt)`

Here n =2 .

Substitute the values,

`9350=P(1+(5)/(100*2))^(2*4)`
`9350=P(1+0.025)^8`
`9350=P(1.025)^8`
`P=(9350)/(1.2184)=7673.98\text{dollar}`

Hence the present value is 7673.98 dollar.