SOLUTION: A certain sum invested at 4% per annum compounded semi-annually amounts to $7803 after one year. Find the sum.
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Question 204162: A certain sum invested at 4% per annum compounded semi-annually amounts to $7803 after one year. Find the sum.
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
The formula that you need is:
Present Value of a Future Amount =
FA = future amount = $7803.
n = 2 halves of a one year = 2
i = interest rate per half of a year = 4% / 2 / 100% = .02
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Present Value of a Future Amount becomes:
7803/(1.02)^2 = 7500 = $7,500.00
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You invested $7,500.00 at the start of the year.
At the end of the first half you had 7500 * 1.02 = 7650 = $7,650.00
At the end of the second half you had 6750 * 1.02 = 7803 = $7,803.00
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