Pre Cal Math Help!!!

Question

The present value of a sum of money is the amount that must be invested now, at a given rate of interest, to produce the desired sum at a later date.

Find the present value of $10,000 if interest is paid at a rate of 6% per year, compounded semiannually, for 2 years. (Round your answer to the nearest cent.)

Answer 1

The applicable formula is:

 

FV = PV*(1 + r/n)^nt

 

Where:

• FV = future value = $10,000
• PV = Present Value = unknown
• r = annual interest ate expressed as a decimal = 6% = 0.06
• n = number of compoundings per year = semi-annual = 2
• t = years

 

$10,000 = PV*(1 + 0.06/2)^2*2

 

$10,000 = PV*(1.03)⁴

 

$10,000 = PV*(1.1255)

 

Solve for PV