7. By using the table in the handbook, the present value of $12,000 for six years compounded at 6 percent semiannually is:
http://www.jiskha.com/display.cgi?id=1317828354
By using the table in the handbook, the present value of $12,000 for six years compounded at 6 percent semiannually is:
To find the present value of $12,000 for six years compounded at 6 percent semiannually using the table in the handbook, follow these steps:
1. Identify the interest rate per compounding period: The interest rate is 6 percent, which means the semiannual interest rate is 6/2 = 3 percent.
2. Determine the number of compounding periods: Since the money is compounded semiannually for six years, the total number of compounding periods will be 6 * 2 = 12.
3. Locate the factor in the present value table: Look for the factor that corresponds to the interest rate of 3 percent and the compounding period of 12.
4. Multiply the factor by the future amount: Multiply the factor from the table by the future amount, which is $12,000.
The result will be the present value of $12,000 for six years compounded at 6 percent semiannually.
To calculate the present value of $12,000 for six years compounded at 6 percent semiannually using a table in the handbook, you will need to follow these steps:
Step 1: Identify the correct table and factor in the handbook that corresponds to the given interest rate and compounding frequency. In this case, since the interest is compounded semiannually at 6 percent, you will need to use a table or a factor for semiannual compounding at 6 percent.
Step 2: Determine the number of compounding periods. In this case, since the investment is for six years and is compounded semiannually, there will be 12 compounding periods (6 years x 2 compounding periods per year = 12 compounding periods).
Step 3: Locate the factor in the table that corresponds to the number of compounding periods and interest rate. For example, if the table shows factors for different compounding periods and interest rates, find the factor for 12 compounding periods and 6 percent interest rate for semiannual compounding.
Step 4: Multiply the factor from the table by the initial amount or future value. In this case, multiply the factor by $12,000 to find the present value.
Step 5: Calculate the present value using the formula: Present Value = Future Value / Factor.
By following these steps and locating the appropriate table and factor, you can determine the present value of $12,000 for six years compounded at 6 percent semiannually.