Answer:
P=$41,669.11779
They Should Pay $41,669.11779 so that the bond will be worth $85000 at maturity.
Step-by-step explanation:
The formula we are going to use is:
[tex]A=P(1+\frac{r}{n})^{nt}[/tex]
Where:
A is the final Amount
P is the present Amount
r is the interest
n is time interest is compounded
t is the time in years
In our Case:
[tex]85,000=P(1+\frac{0.04}{2})^{2*18}\\ 85,000=P(2.03988)\\P=\$41,669.11779[/tex]
They Should Pay $41,669.11779 so that the bond will be worth $85000 at maturity.
Answer: they should pay $41669
Step-by-step explanation:
We would apply the formula for determining compound interest which is expressed as
A = P(1+r/n)^nt
Where
A = total amount in the account at the end of t years
r represents the interest rate.
n represents the periodic interval at which it was compounded.
P represents the principal or initial amount deposited.
t represents the duration of the investment.
From the information given,
A = 85000
r = 4% = 4/100 = 0.04
n = 2 because it was compounded 2 times in a year.
t = 18 years
Therefore,
85000 = P(1 + 0.04/2)^2 × 18
85000 = P(1 + 0.02)^36
85000 = P(1.02)^36
85000 = 2.0399P
P = 85000/2.0399
P = 41669
