Pinnacle Homes, a real estate development company, is planning to build five homes, each costing $125,000, in 2.5 years. The Galaxy Bank pays 6% interest compounded semiannually. How much should the company invest now to have sufficient funds to build the homes in the future?

Answer 1

PV = 125000(1.03)^-5
= $107,826.10

Answer 2

107826.25

Answer 3

539131.25

Answer 4

None of these are right.