Molly borrows money by promising to make a single payment of $100,000 at the end of 5 years. How much money is Molly able to borrow if the interest rate is 10%, compounded semiannually? (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.) A) $61,390 B) $62,090 C) $38,550 D) $74,850 E) $78,350

Question

Quizplus · Accepted Answer

The present value (PV) of $100,000 due in 5 years at a 10% interest rate compounded semiannually is calculated using the formula PV = FV / (1 + r/n)^(nt). Here, FV = $100,000, r = 0.10, n = 2, t = 5. The PV factor is approximately 0.6139, so PV = $100,000 * 0.6139 = $61,390.

Molly Borrows Money by Promising to Make a Single Payment