How much money should be invested now (rounded to the nearest cent), called the initial investment, in a Treasury Bond investment that yields 4.75% per year, compounded monthly for 10 years, if you wish it to be worth $20,000 after 10 years?

Answer 1

i = .0475/12 = .00395833..
n = 12(10) = 120

PV = 20,000(1.00395833..)^-120
= $12,449.37