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?
3 answers
$12,500 x 2 = confused about the rest.
See previous post: Mon, 2-29-16, 2:12 AM.
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 = ?.
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 = ?.