question archive How much will you invest today in a fund that earns 5% compounded semiannually to realize a compound amount of P80,693
How much will you invest today in a fund that earns 5% compounded semiannually to realize a compound amount of P80,693
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How much will you invest today in a fund that earns 5% compounded semiannually to realize a compound amount of P80,693.33 after 6 years?
Given:
Required:
Solution:
Answer:
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Given:
Rate of interest (R) = 5%
Compound amount (FV) = P80,693.33
Maturity Periods (N) = 6 Years
Required: Present Value ?
Solution:
Present Value = FV/(1+(R/2))^(N*2)
= P80,693.33/(1+(5%/2))^(6*2)
= P80,693.33/(1.025)^12
= P60,000.00041
Answer: P60,000
Note:
"2" is used, as compounding period is semiannual (means 2 times in a year).
