Bill wants to give Maria a $500,000 gift in seven years.If money is worth 6% compounded semiannually,what is Maria's gift worth today?

Question

Quizplus · Accepted Answer

To find the present value of the gift, use the formula for present value with compound interest: PV = FV / (1 + r/n)^(nt). Here, FV = $500,000, r = 0.06, n = 2 (semiannual compounding), and t = 7 years. Plugging in these values gives PV = $500,000 / (1 + 0.06/2)^(2*7) = $330,560.

Bill Wants to Give Maria a $500,000 Gift in Seven