Narrative 11-1
Solve the following problems using either Tables 11-1 or 11-2 from your text. When necessary, create new table factors. (Round new table factors to five decimal places, round dollars to the nearest cent and percents to the nearest hundredth of a percent)
-Gil wants to have $9,500 in 7 years. Use the present value formula to calculate how much he should invest now at 2% interest, compounded semiannually in order to reach his goal.
A) $8,125.25
B) $8,875.36
C) $8,264.62
D) $8,800.89

Question

Quizplus · Accepted Answer

To find the present value, use the formula: PV = FV / (1 + r/n)^(nt). Here, FV = $9,500, r = 0.02, n = 2 (since interest is compounded semiannually), and t = 7. Calculate PV = 9500 / (1 + 0.02/2)^(2*7) = $8,264.62.

Narrative 11-1 Solve the Following Problems Using Either Tables 11-1 or 11-2