MATH SOLVE

4 months ago

Q:
# 6. Using Table 11-2 from your text, calculate the present value (principal) and the compound interest given: Compound Amount = $1,250 Term of Investment = 6 years Nominal rate = 6% Interest is compounded semiannually

Accepted Solution

A:

Answer:The Principal is $877.19 And Compound Interest is $372.81 Step-by-step explanation:Given as :Amount after investment = $1250The time period of investment = 6 yearsThe nominal rate = 6% compounded semiannually Let the principal = P From compounded method Amount = Principal × [tex](1 + \frac{Rate}{2\times 100})^{2\times Time}[/tex]Or, $1250 = P × [tex](1 + \frac{6}{2\times 100})^{2\times 6}[/tex]Or, $1250 = P × [tex](1.03)^{12}[/tex]Or, $1250 = P × 1.425∴ P = [tex]\frac{1250}{1.425}[/tex] I.e P = $877.19 So , Principal = $877.19 Now, Compound Interest = Amount - Principal = $1250 - $877.19 Or, CI = $372.81Hence The Principal is $877.19 And Compound Interest is $372.81 Answer