Question 1142172
i believe you're saying that the future value is 1250 and that you want to know what the present value is.


under that assumption, the following formula applies.


f = p * (1 + r) ^ n


f is the futurevalue
p is the present value
r is the interest rate per time period
n is the number of time periods.


you are given that n = 6 years and that f = 1250.


you are also given that r = 6% per year.


if your interest is compounded semi-annually, then your time periods need to be in semi-annual periods.


6% per year / 2 = 3% per semi-annual period.
in the formula, you use the rate, not the percent.
3% / 100 = an interest rate .03 per semi-annual time period.


n = 6 years * 2 semi-annual periods per year = 12 semi-annual time periods.


the formula becomes 1250 = p * (1 + .03) ^ 12


solve for p to get p = 1250 / (1 + .03) ^ 12 to get p = 876.7248502.


confirm by replacing p in the original equation with that to get:


f = 876.7248502 * (1 + .03) ^ 12 = 1250.


this confirms the solution is correct.


the solution is the present value = 876.7248502.