Question

pete air wants to buy a used jeep in 3 years. he estimates the jeep will cost 17,100

Pete Air wants to buy a used Jeep in 3 years. He estimates the Jeep will cost $17,100. Assume Pete invests $12,100 now at 6 % interest compounded semiannually a. Calculate the maturity value of the investment. (Use the Table provided.) (Do not round intermediate calculations. Round your answer to the nearest cent.) Maturity value b. Will Pete have enough money to buy the Jeep at the end of 3 years? O No O Yas

Answer 1

Amount invested = $12,100

Interest rate (i) = 6/2

= 3% semi annually

Timer period (n) = 3 x 2

= 6 semi annually periods

Future value = Amount invested x Future value factor ( i%, ,n)

= 12,100 x Future value factor (3%,6)

= 12,100 x 1.19405

= $14,448

Hence, maturity value of amount invested = $14,448

b.

Pete will not have enough money to buy the jeep at the end of 3 years.

Kindly comment if you need further assistance. Thanks‼!

Note: Exact answer may slightly differ due to rounding off and factor value considered