Question

the desired accumulated amount is 85000 after 11 years invested in an account with 7% interest compounded semiannually the amount to be invested now or the present value needed is

Answer 1

I don't have a calculator with me right now to solve this but just use this equation: A = P(1+(r/n)^(nt) ... A would be final amount, P is principle amount, r is interest rate EXPRESSED AS A DECIMAL, n is compoundings per year, and t is total number of years... so 85000 = P(1+(.07/2)^(2*11) ... solve for P... I think semiannual is 2 but I could be wrong about.

Answer 2

Use the compound amount formula:

A = P (1 + r/n)^(nt), where r is the interest rate as a decimal fraction, n is the number of compounding periods per year, t is the number of years and P is the principal.

Then A = $85000 = P*(1 + 0.07/2)^(2*11), or

            = $85000/ (1 + 0.035)^22   =    $39877.80

This is the amount to be invested to result in $85000 after 11 years.