Asked by Courtnie
Calculate the present value for $1400 needed in 4 years, invested at 4.2% per year compounded semi-anually
Answers
Answered by
Henry
P = Po(1+r)^n.
r = (4.2%/2)/100% = 0.021 = Semi-annual
% rate expressed as a decimal.
n = 2comp./yr * 4yrs. = 8 Compounding periods.
P = Po(1.021)^8 = 1400
Po = 1400/(1.021)^8 = $1185.56
r = (4.2%/2)/100% = 0.021 = Semi-annual
% rate expressed as a decimal.
n = 2comp./yr * 4yrs. = 8 Compounding periods.
P = Po(1.021)^8 = 1400
Po = 1400/(1.021)^8 = $1185.56