Question

Carol wants to invest money in a 6% Certificate of Deposit (CD) that compounds semiannually. Carol would like the account to have a balance of $50,000 five years from now. How much must Carol deposit to accomplish her goal

Answer 1

Answer:

the present value is $37,230.10

Explanation:

The computation of the present value is shown below:

As we know that

Future value = Present value × (1 + rate of interest)^time period

$50,000 = Present value × (1 + 0.06 ÷ 2)^5 × 2

$50,000 = Present value × (1.03)^10

$50,000 = Present value × 1.343

So, the present value is $37,230.10

hence, the present value is $37,230.10

We simply applied the above formula