SOLUTION: Southwest dry cleaners believes that it will need new equipment in 9 years. The equipment will cost $26,000. How much should be invested today at 5% compounded semiannually, to yie

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Question 913403: Southwest dry cleaners believes that it will need new equipment in 9 years. The equipment will cost $26,000. How much should be invested today at 5% compounded semiannually, to yield $26,000?
Answer by stanbon(75887) About Me  (Show Source):
You can put this solution on YOUR website!
Southwest dry cleaners believes that it will need new equipment in 9 years. The equipment will cost $26,000. How much should be invested today at 5% compounded semiannually, to yield $26,000?
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A(t) = P(1+(r/n))^(nt)
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26000 = P(1+(0.05/2))^(2*9)
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26000 = P(1 + 0.025)^18
P = 26000/(1.5597)
P = $16670.31
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Cheers,
stan H.