In 2 years Amanda must pay a pledge of 7400 to her colleges

In 2 years Amanda must pay a pledge of $7,400 to her college\'s building fund. What lump can she deposit today at 8% compounded semiannually so that she will have enough to pay the pledge? Hint: The sum that Amanda needs to deposit today

Solution

applying compounded semiannually formula

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

7400 = P ( 1 + .08 / 2 ) ^ 2*2

P = 7400 / 1.16985856

P = 6325.55

the sum that Amanda needs to deposit is $ 6325.55