Question

A debt of $5363.96 is due October 1, 2025. What is the value of the obligation on October 1, 2018, If money is worth 2% compounded semi-annually? The value of the obligation is s (Round to the nearest cent as needed. Round all intermediate values to six decimal places as needed)

Answer 1

The due amount is given as $5363.96 and the rate interest is given as 2% compounded semi- annually, the time period from 1 Oct,2018 to 1 oct,2025 is 7 years then using the formulla for the Principal to be compounded semi-annually and substituting all the given values the Principal Value is known i.e. Value of obligation is known.

Som The due amount & A= $5363.96 Rate of compound interest r = 2 % Time period from (1 Oct, 2018) to (1 oct, 2025), n = 7 years we need le. is to find the value of the obligation Principal Valve (@. Now, Formulle for the amount when Principal value compounded Semi anually is geren as: A= pri $5363.96 P [1 + $5363.96 = p ( to an 2x100 72*7 2 28100 32*7 101 714 Lost? P $ 5363.96 101114 hod) P $ 4 666.447 Valore of the obligation on (1 oct, 2018)