Business: Joe Beary wants to attend Riverside College. Eight years from today he will need $50,000. If Joe s bank pays 6% interest compounded semiannually, what must Joe deposit today to have $50,000 in 8 years?

Joe Beary wants to attend Riverside College. Eight

jamesnaquan132

21.01.2022

$31,158

Explanation:

Use the formula for compound interest, with semiannual compound interest rate.

$Future\text{ }Value=Deposit\times (1+APR/n)^{(n\times t)}$

For semiannual compound interest the number of periods, n, in a year is 2.

APR is the annual percentage rate, which is 6% in this problem. So, APR is 6%/2 = 0.06/2 = 0.03

Then, substitute in the formula with:

Future value: $50,000APR/n = 0.03n × t = 2 × 8 = 16

$\$50,000=Deposit\times (1+0.03)^{16}\\\\\\Deposit=\$50,000/(1.03)^{16}=\$31,158.35$

Round to the nearest dollar: $31,158.

0,0(0 оценок)