Question

12–23. Tony Ring wants to attend Northeast College. He will need $60,000 4 years from today. Assume Tony’s bank pays 12% interest compounded semiannually. What must Tony deposit today so he will have $60,000 in4 years?

Answer 1

See below

Explanation:

Period = 1/2 year total 4years = 8 periods

i = interest per period in decimal form = .12/2 = .06

initial deposit = ?

Final value = 60 000

60 000 = ? ( 1 + .06)^8

? = 37644.74