Question 1193551: Use the following formula, where P is the present value of A dollars t years from now, earning annual interest r compounded n times per year.
P=A(1+r/n)^-nt
Find the present value of $400,000 20 years from now, if interest is compounded semiannually at 11.4%.
The present value is approximately $___
(Round to the nearest hundred as needed.)
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Found 2 solutions by Boreal, ikleyn:
Answer by Boreal(15235)   (Show Source):
You can put this solution on YOUR website! P=400000*(1+(0.114/2)^40, the 40 is 2 times compounded per year for 20 years
Round at the end. $3,673,300
rough check: should double in about 6 years (slightly longer) due to the rule of 70. That is 3 doublings in 18 years, and the final amount is a little more than 9 times the original, which makes sense.
Answer by ikleyn(52777)  (Show Source):
You can put this solution on YOUR website! .
What tutor @Boreal calculated for you in his post, is not a present value of $400,000.
He calculated FUTURE VALUE of $400,000 20 years from now.
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