Present and future value tables of $1 at 3% are presented below. 1 1.03000 0.970

Question

Present and future value tables of $1 at 3% are presented below. 1 1.03000 0.97087 1.0000 0.97087 1.03001.00000 2 1.06090 0.942602.0300 1.91347 2.0909 1.97087 1.09273 0.91514 3.0909 2.82861 3.1836 2.91347 4 1.12551 0.88849 4.18363.71710 4.3091 3.82861 5 1.15927 0.86261 5.3014.57971 5.4684 4.71710 61.19405 0.83748 6.4684 5.41719 6.6625 5.57971 7 1.22987 0.81309 7.6625 6.23028 7.8923 6.41719 8 1.26677 0.78941 8.8923 7.01969 9.15917.23028 9 1.30477 0.76642 10.1591 7.78611 10.4639 8.01969 10 1.34392 0.7440911.4639 8.53020 11.8078 8.78611 11 1.38423 0.72242 12.8078 9.25262 13.1920 9.53020 12 1.42576 0.70138 14.1920 9.95400 14.6178 10.25262 13 1.46853 0.68095 15.6178 10.63496 16.0863 10.95400 14 1.51259 0.66112 17.0863 11.29607 17.5989 11.63496 15 11.55797 ?0.64186 | 18.5989 |11.93794 | 19.1569 112.29607 16 1.60471 o.62317 20.1569 [12.56110 20.7616 12.93794

Explanation / Answer

$ 66,998

Working:

Amount to be deposited will be equal to present value of desired future Amount. Present Value = Future Value x Present Value of $ 1 compounded semi annually at 3% = $       80,000 x 0.83748 = $       66,998 Interest is compounded semi annually so semi annually adjusted interest rate will be 3% and total semi annual period will be 6 (3 x 2). So, Present Value of $ 1 at 3% for 6th period is 0.83748

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