Question 1161911: Jake likes to have $30,000 in his account when he retires in 25 years. How much should he invest in his account now, if interest is 15% compounded semi-annually?(2 points)
Question 17 options:
$453.1
$4,918.03
$32,250
$806.67
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! the answer is 806.67.
here's how you find it.
the formula to use is f = p * (1 + r) ^ n
f is the future value
p is the present value
r is the interest rate per time period.
n is the number of time periods.
the time periods are half years because a semi-annual period is a half of a year.
the interest rate per half year is .15 per year / 2 = .075 per half year.
the number of time periods is 25 years * 2 = 50 half years.
f is equal to 30,000
the formula becomes 30,000 = p * (1 + .075) ^ 50.
solve for p to get p = 30,000 / (1 + .075) ^ 50 = 806.673968.
round to the nearest penny to get 806.67.
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