Question

Present and future value tables of $1 at 3% are presented below. N 1 2 3 4 5 6 7 8 9 FV $1 1.03000 1.06090 1.09273 1.12551 1.15927 1.19405 1.22987 1.26677 1.30477 1.34392 1.38423 1.42576 1.46853 1.51259 155797 1.60471 PV $1 0.97087 0.94260 0.91514 0.88849 0.86261 0.83748 0.81309 0.78941 0.76642 0.74409 0.72242 0.70138 0.68095 0.66112 0.64186 0.62317 FVA $1 1.0000 2.0300 3.0909 4.1836 5.3091 6.4684 7.6625 8.8923 10.1591 11.4639 12.8078 14.1920 15.6178 17.0863 18.5989 20.1569 PVA $1 0.97087 1.91347 2.82861 3.71710 4.57971 5.41719 6.23028 701969 7.78611 8.53020 9.25262 9.95400 10.63496 11.29607 11.93794 12.56110 FVAD $1 1.0300 2.0909 3.1836 4.3091 5.4684 6.6625 7.8923 9.1591 10.4639 11.8078 13.1920 14.6178 16.0863 17.5989 19.1569 20.7616 PVAD $1 1.00000 1.97087 2.91347 3.82861 4.71710 5.57971 6.41719 7.23028 8.01969 8.78611 9.53020 10.25262 10.95400 11.63496 12.29607 12.93794 10 11 12 13 14 15 Shane wants to invest money in a 6% CD account that compounds semiannually. Shane would like the account to have a balance of $80.000 4 years from now. How much must Shane deposit to accomplish his goal? Multiple Choice < Prey 5 of 9 Next > MacBook Pro 2 $ 6 7 8 5 2 3 4 Т. Y U R. W E

Answer 1

$63,153

Semi-annual interest rate = 6% / 2 = 3%
Semi-annual nper = 4 x 2 = 8 periods
Future value = $80,000

PV $1 at 3% for 8 periods = 0.78941

Amount should S deposit to accomplish his goal = Future value x PV $1 at 3% for 8 periods
= $80,000 x 0.78941
= $63,153