Chapter 11.II, Problem 18RE

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8th Edition

Robert Brechner + 1 other

ISBN: 9781305585447

Textbook Problem

Solve the following word problems by using table 11-2.

Pinnacle Homes, a real estate development company, is planning to build five homes, each costing $125,000, in

To determine

**To calculate:** The Company’s initial investment that has total compound amount

Explanation

**Given information:**

The semiannually interest rate is

**Formula used:**

Compounding period can be calculated by formula given below:

Here, *m* is the period per year.

The interest rate per period can be calculated by dividing the annual, or nominal, rate by the number of periods per year,

The present value (principal) can be calculated by the formula given below:

In Present value table, the table factor is the intersection of the rate-per-period column and the number-of-periods row is the present value of

**Calculation:**

Consider the compound amount

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