Mia Kaminsky wants to attend Riverside Community College. She will need to have $25,000 six years from today. Mia is wondering what she will have to put back in the bank today so she will have $25,000 six years hence. Her bank pays 5 percent compounded semiannually. By using tables in the handbook, the amount Mia will have to deposit is:
$18,950
$33,226
$18,590
$33,622
None of these

Question

Mia Kaminsky wants to attend Riverside Community College. She will need to have $25,000 six years from today. Mia is wondering what she will have to put back in the bank today so she will have $25,000 six years hence. Her bank pays 5 percent compounded semiannually. By using tables in the handbook, the amount Mia will have to deposit is: 
 $18,950
 $33,226
 $18,590
 $33,622
 None of these

anonymous · Answer

The Compound Interest Equation

    P = C (1 + r/n)^nt 

where
    P = future value
    C = initial deposit
    r = interest rate (expressed as a fraction: eg. 0.06)
    n = # of times per year interest in compounded
    t = number of years invested

25000 = C (1 + 0.05/2)^(2x6)

I assume you can solve for C?? Works out to somewhere between 18000 and 19000. If you need help with working out C, let me know.