Question

A debt of $3571.31 is due November 1, 2025. What is the value of obligation on May 1, 2016, if money is worth 4% compounded semi-annually?

The is the value of the obligation is $____.

Answer 1

Answer:

  2500.49

Step-by-step explanation:

  --Given--

    Amount (A): $3571.31

           Rate (r): 4%

Compound (n): 2                          **semi-annually means 2 times a year**

           Time (t): 9                          **2016 to 2025 is 9 years time**

  --Solve--

     P = A / (1 + r/n)^nt

         = 3571.31 / (1 + .04/2)^(2 * 9)

         = 3571.31 / (1.02 )^(18)

         = 3571.31 / 1.02¹⁸

         = 3571.31 / 1.02¹⁸

         = 3571.31 / 1.428246

         = 2500.49