Question

What amount of money invested today at 3.54% compounded semiannually will have an accumulated value of $551,000 in 7 years from now. Round all answers to two decimal places if necessary.

Answer 1

Solution:

$A=\$551,000; t=7;n=2;r=3.54\%$

Let the invested money be $P.

Using $A=P(1+\dfrac{r}{100n})^{nt}$

$\Rightarrow 551000=P(1+\dfrac{3.54}{200})^{14} \\ \Rightarrow 551000=P(1.2784) \\ \Rightarrow P=\$431007.51$