Solve the problem.
-How much money should you invest now to have $5000 in 12 years if you invest the money at a Rate of 1.4%, compounded semiannually?
A) $2500.00
B) $4598.50
C) $4229.24
D) $3577.30

Question

Quizplus · Accepted Answer

To find the present value (the amount you should invest now) to have $5000 in 12 years at a rate of 1.4% compounded semiannually, you use the formula for the present value of a single sum: $PV = \frac{FV}{(1 + r/n)^{nt}}$, where PV is the present value, FV is the future value ($5000), r is the annual interest rate (1.4% or 0.014), n is the number of times the interest is compounded per year (2 for semiannually), and t is the time in years (12). Plugging in the values: $PV = \frac{5000}{(1 + 0.014/2)^{2*12}}$, which calculates to approximately $4229.24.

Solve the Problem. -How Much Money Should You Invest Now to Have $5000