By using the table in the handbook, the present value of $12,000 for six years compounded at 6 percent semiannually is: (Points :
To find the present value of $12,000 compounded at 6 percent semiannually for six years, you can use the present value of 1 table in the handbook. Here's how to do it:
Step 1: Determine the number of compounding periods. Since it is semiannual compounding, multiply the number of years by 2. In this case, 6 years * 2 = 12 compounding periods.
Step 2: Find the corresponding interest rate and compound period combination in the table. Look for the row that represents the interest rate of 6 percent, and then find the column that corresponds to 12 compounding periods.
Step 3: Read the value from the table where the row and column intersect. This value represents the present value factor for the given interest rate and compounding period.
Step 4: Multiply the present value factor by the future value of $12,000 to calculate the present value. In this case, the present value = $12,000 * present value factor.
By following these steps and referring to the present value of 1 table, you will be able to find the present value of $12,000 for six years compounded at 6 percent semiannually.