SOLUTION: An investment company pays 7% compounded semiannually. You want to have $16,000 in the future. How much should you deposit now to have that amount 5 years from now?

Question 1091601: An investment company pays 7% compounded semiannually. You want to have $16,000 in the future.
How much should you deposit now to have that amount 5 years from now?
How much should you deposit now to have that amount 10 years from now?

Answer by mathmate(429) (Show Source): You can put this solution on YOUR website!
Question:
An investment company pays 7% compounded semiannually. You want to have $16,000 in the future.
How much should you deposit now to have that amount 5 years from now?
How much should you deposit now to have that amount 10 years from now?

Solution:
Present value=P
Future value=F=16000
(a) In 5 years, n=5*2=10 half-years
16000=P(1+0.07/2)^10
P=16000/(1+0.07/2)^10
=11342.70 should be deposited now.
(b) in 10 years, n=10*2=20 half-years
16000=P(1+0.07/2)^20
P=16000/(1+0.07/2)^20
=8041.05
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SOLUTION: An investment company pays 7&#8203;% compounded semiannually. You want to have $16,000 in the future. How much should you deposit now to have that amount 5 years from&#8203; now?

SOLUTION: An investment company pays 7% compounded semiannually. You want to have $16,000 in the future. How much should you deposit now to have that amount 5 years from now?