Question
Asked Oct 26, 2019
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How much money should be deposited today in an account that earns 5%
compounded semiannually so that it will accumulate to $7000 in 2 years?
(Round to the nearest pen ny - hundredth place. For example, $123.46)
A= PCI)
7006 PCI
nt
CI+
a a
700U P(I 0.03
7000 PCI
PC it 00116667) ay
OO41666667
OOL
7, 7a 6. 6 C
7a6.6
7,726 64- 7/000
nd
he depested
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How much money should be deposited today in an account that earns 5% compounded semiannually so that it will accumulate to $7000 in 2 years? (Round to the nearest pen ny - hundredth place. For example, $123.46) A= PCI) 7006 PCI nt CI+ a a 700U P(I 0.03 7000 PCI PC it 00116667) ay OO41666667 OOL 7, 7a 6. 6 C 7a6.6 7,726 64- 7/000 nd he depested

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Expert Answer

Step 1

Let P be the amount to be deposited today.

r = rate per annum = 5%

m = frequency of compunding in a year = semi annual compounding = 2 times in a year

n = number of years = 2

A = Accumulated value = $ 7,000

Step 2

Hence, the conecting equation is:

A = 7,000 = P x (1 + r / m)n x m = P x (1 + 5% / 2)2 x 2 = 1.1038P

Hen...

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