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4 March, 02:05

Solve the problem. Round to the nearest cent. Tabby Soft believes that it will need new equipment in 5 years. The equipment will cost $26,000. What lump sum should be invested today at 6%, compounded semiannually, to yield $26,000?

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  1. 4 March, 02:08
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    Hi there

    The formula of compound interest is

    A=p (1+r/k) ^kt

    A future value 26000

    P present value?

    R interest rate 0.06

    K compounded semiannual 2

    T time 5 years

    We need to solve for p

    P=A: (1+r/k) ^kt

    So

    P=26,000: (1+0.06:2) ^ (2*5)

    P=19,346.44

    Good luck!
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