You have discovered an investment opportunity that earns a 6% rate of interest compounded semiannually.What amount should you deposit today to have $5,000 in three years?
A)$3,832
B)$4,100
C)$4,187
D)$4,237

Question

Quizplus · Accepted Answer

We can use the formula A=P(1+r/n)^(nt), where A is the future value, P is the present value, r is the annual interest rate, n is the number of times compounded per year, and t is the number of years. Plugging in the given values, we get:
5000 = P(1+0.06/2)^(2*3)
Solving for P, we get P = $4,187. Therefore, the best choice is C.

You Have Discovered an Investment Opportunity That Earns a 6