SOLUTION: 3. After purchasing the townhouses, Willie receives an assessment from the town for $17,500 due in 2 years to pay for road repairs and new sewer hookups for the properties. How mu

Question 618990: 3. After purchasing the townhouses, Willie receives an assessment from the town for $17,500 due in 2 years to pay for road repairs and new sewer hookups for the properties. How much would he need to invest today in a CD paying 5%, compounded semiannually, to fully pay the assessment in 2 years
Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
3. After purchasing the townhouses, Willie receives an assessment from the town for $17,500 due in 2 years to pay for road repairs and new sewer hookups for the properties. How much would he need to invest today in a CD paying 5%, compounded semiannually, to fully pay the assessment in 2 years
----
A(t) = P(1+(r/n))^(nt)
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17500 = P(1+(0.05/2))^(2*2)
----
17500 = P(1.025)^4
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P = $15854.14
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Cheers,
Stan H.
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