Al Miler, the owner of Al's Garage, estimates that he will need $29,000 for new equipment in 15 years. Al decides that he will put aside the money now so that in 15 years the $29,000 will be available. His bank offers him 10% interest compounded semiannually. Al must invest today:
A) $6,709.95
B) $6,942.60
C) $6,701.60
D) $125,335.10
E) None of these

Question

Quizplus · Accepted Answer

The correct answer is A because $6,709.95 is the present value of $29,000 to be received in 15 years at 10% interest compounded semiannually.

Al Miler, the Owner of Al's Garage, Estimates That He