Present and future value tables of 1 at 3 are presented belo

Present and future value tables of $1 at 3% are presented below. PVA $1 0.97087 FV $1 PV $1 103000 0.97087 0.94260 0.91514 0.88849 0.86261 FVA $1 FVAD S1PVAD $1 10000 2.0300 3.0909 4.1836 5.3091 0.83748 6.4684 1.0300 11.00000 191347 2 0909 3.1836 4.3091 5.4684 5.41719 6.6625 78923 91591 77861110.4639 11.8078 9.25262 13.1920 2 2.82861 1.97087 2.91347 1.09273 1.12551 115927 1.19405 1.22987 1.26677 1.30477 4 5 6 3.71710 4.57971 3.82861 4.71710 5.57971 6.41719 7.23028 8.01969 8.78611 9.53020 4.6178 10.25262 068095 15.6178 10.63496 16.0863 10.95400 11.29607 175989 11.63496 191569 12.29607 12.56110 207616 1293794 8 9 10 8.8923 10.1591 134392 074409 114639 1.384230.72242 12.8078 0.7013814.1920 0.81309 0.78941 0.76642 76625 6.23028 701969 8.53020 12 13 14 15 16 1.42576 9.95400 1.51259 1.55797 160471 0.66112170863 0.64186 18.5989 0.62317 20.1569 11.93794 Bill wants to give Maria a $560,000 gift in 8 years. If money is worth 6% compounded semiannually, what is Maria\'s gift worth today?

Solution

We use the formula:
A=P(1+r/200)^2n
where
A=future value
P=present value
r=rate of interest
n=time period.

560000=P(1+0.06/2)^(2*8)

P=$560000/(1+0.06/2)^(2*8)

=$560000*0.62317

which is equal to

=$348975(Approx).