question archive You plan to invest an amount of money in a certificate of deposit (CD) at your bank
You plan to invest an amount of money in a certificate of deposit (CD) at your bank
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You plan to invest an amount of money in a certificate of deposit (CD) at your bank. The stated interest rate applied to the CD is 12%, compounded monthly. How much must you invest if you want the balance in the CD account to be P8,500 in 2½ years?
a. P11,302.14
b. P6,306.34
c. P11,941.89
d. P143,302.66
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Answer : b. P6,306.34
Step-by-step explanation
| Given : | ||
| Future Value | 8,500.00 | |
| Interest | 12% | |
| Compounding | Monthly | |
| Period | 2.5 Years | |
| Formula : | Present Value = Future Value / ( 1 + 12% / 12 ) Period x 12 | |
| Solution : | ||
| Future Value | 8,500.00 | |
| Divide : Interest Factor (1+12%/12)2.5 x 12 | 1.34785 | |
| Present Value | 6,306.34 | |
