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30 March, 09:19

You have a goal of having $270,000 four years from today. The return on the investment is expected to be 8% and will be compounded semi-annually. The amount that needs to be invested today is closest to: (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor (s) from the tables provided.)

A) $180,000.

B) $197,989.

C) $135,000.

D) $197,289.

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  1. 30 March, 11:14
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    Answer:D $197,289

    Explanation:

    Compounding a present value for a future sum is calculated thus:

    FV = PV (1+r/n) ^nt

    FV = $270,000

    Rate = 8%

    Time = 4yrs

    Compounded semi annually

    $270,000 = PV (1+0.08/2) ^2*4

    270,000=PV (1.04) ^8

    270,000=PV (1.368569050405)

    270,000/1.3685690504052736

    PV = 197,289
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