How much would need to deposit in a bank account today in or

How much would need to deposit in a bank account today in order to have $11,700 in the account 10 years from now if the account earns interest at a rate of 3.4% compounded semiannually? a. $3,348.36 b. $5,994.81 c. $8,531.54 d. $8,374.92 e. $9,884.99

Solution

A=P*(1+(r/n))^nt

A=amount accumulated

r =rate of interest

n=number of times compounded per year

t =number of years

P=principal amount

$11,700 in the account 10 years from now if the account earns interest at a rate of 3.4% compounded semiannually

A=11700

t=10

n=2

r=3.4/100 =0.034

A=P*(1+(r/n))^nt

11700=P*(1+(0.034/2))^2*10

11700=P*(1+(0.017))²⁰

11700=P*(1.017)²⁰

P=8351.54$

8351.54$ needed to deposit in a bank account today in order to have $11,700 in the account 10 years from now if the account earns interest at a rate of 3.4% compounded semiannually