Paul Havlik promised his grandson Jamie that he would give h

Paul Havlik promised his grandson Jamie that he would give him $7,000 6 years from today for graduating from high school. Assume money is worth 8% interest compounded semiannually.

What is the present value of this $7,000? (Please use the following provided Table.) (Do not round intermediate calculations. Round your answer to the nearest cent.)

What is the present value of this $7,000? (Please use the following provided Table.) (Do not round intermediate calculations. Round your answer to the nearest cent.)

Solution

Year Year Interest Total Interest Balance 1 $571.20 $571.20 $7,571.20 2 $617.81 $1,189.01 $8,189.01 3 $668.22 $1,857.23 $8,857.23 4 $722.75 $2,579.98 $9,579.98 5 $781.73 $3,361.71 $10,361.71 6 $845.52 $4,207.23 $11,207.23