Find the amount that should be
set aside today to yield the desired future amount. Use the
table.
|
Future amount needed |
Interest rate |
Compounding period |
Investment time |
|
$2000 |
3% |
semiannually |
5 years |
Homework Answers
Future amount needed
Interest rate = 3%
Investment Time = 5 Years
Compounding = semiannually
r= 3%/2 = 1.5%
n= 5*2 =10
Present Value = future Amount * Pv $1 at r for n periods
Present Value = $2,000* 0.86167
= $1,723.34 (Answer)
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