Using the table in the handbook, the present value of $12,000 for six years compounded at 6% semiannually is:
A)$12,814.08
B)$8,461.08
C)$8,416.80
D)$8,614.80
E)None of these

Question

Quizplus · Accepted Answer

Using the table for Present Value of an Annuity Due, we can find the present value factor for 6 years at 6% semiannually to be 8.4168.

Then, we can multiply this factor by the annual payment of $2,000 to get the present value:

$2,000 x 8.4168 = $16,833.60

However, since the payments are semiannual, we need to divide this by 2 to get the correct present value:

$16,833.60 / 2 = $8,416.80

Using the Table in the Handbook, the Present Value of $12,000