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What sum of money now is equivalent of $8,250 two years later, if the interest is 4% per 6-month period (8% compounded semi-annually)?

Respuesta :

Answer:

$7052.13

Explanation:

We can calculate the present value of money equivalent of $8,250 two years later by applying present value formula

DATA

Future value = $8,250

Interest rate = 4%

Number of periods = n = 2 years x 2 times a year = 4 times

Present value =?

Solution

PV = [tex]\frac{1}{1+(interest rate)^n} futurevalue[/tex]

PV = ×\[tex]\frac{1}{1+(0.04)^4} 8250[/tex]

PV = $7052.13