Question

Charlie wants to make a one time investment into an account that earns 6% interest compounded semi annually. to earn $338,893 after 26 years, approximately how much money did he invest?


`s = p(1 + (r)/(m) ) {}^(mt)`
A.$72,866.33
B.$74,492.08
C.$528,673.08
D.$217,239.10​

Answer 1

The correct answer is $72,866.33

Answer 2

PV= $72,866.33

Explanation:

Giving the following information:

Interest rate= 6% compounded semiannually

Number of periods= 26*2= 52 semesters

Future value= 338,893

To calculate the initial investment (PV), we need to use the following formula:

PV= FV/(1+i)^n

i= 0.06/2= 0.03

PV= 338,893 / (1.03^52)

PV= $72,866.33