Question

After purchasing the apartment, Seth receives a street, sewer, and gutter assessment for $12,500 due in 2 years. How much would he have to invest today in a CD paying 2%, compounded semiannually, to fully pay the assessment in 2 years?

Answer 1

$12,500 x 2 = confused about the rest.

Answer 2

See previous post: Mon, 2-29-16, 2:12 AM.

Answer 3

P = Po(1+r)^n.

r = (2%/2)/100% = 0.01 = Semiannual % rate expressed as a decimal.

n = 2Comp./yr. * 2yrs = 4 Compounding peri0ds.

P = Po*(1.01)^4 = 12,500.

Po = ?.