Why the answer is b?Homework Answers
No doubt, you have applied the formula correctly.
Let's read the question again, carefully.
- What is the Present value of $100
- to be deposited today
- into an account paying 8% compounded semi-annually for 2 years.
It asks the present value of $100 deposited today.
As the value of $100 today is full $100 as on today,
the correct answer is B. $100.
______________________________________________________________________
I appreciate your application of the formula.
If the question had been, "What is the amount to be deposited today so that it becomes $100 at the end of two years when the interest rate is 8% compounded semi-annually? " - Your calculations would have produced $85.48, which would have been the correct answer.
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