How much do you need to invest now, to get $700 in 5 years at 5.2% interest rate compounded semi-annually?

 

Formula:

The future value of an investment (A) is given by

A = P (1 + i/n)^nt

where P - investment

i - annual interest rate

n - number of compounding period in a year

Given:

The future value of the investment after 5 years is $700.

=> A = $700

Annual interest rate = 5.2%

=> i = 0.052

Time = t = 5 years

The compounding is semi-annual.

Therefore,

Number of compounding period in a year = n = 2

Using the above formula,

A = P (1 + i/n)^nt

$700 = P (1 + 0.052/2)^2*5

$700 = P* 1.026¹⁰

$700 = P * 1.2926

P = $(?1.2926700??) = 541.53

Investment required = $P = $541.53

So it is required to invest $541.53

Answer: Investment = $541.53