Question

2 years, 5% interest rate compounded semiannually, end goal is $17,500.00. how much does the initial investment need to be?

Answer 1

N=2*2(because semi annually)=4, I-5/2=2.5%(Semi annually), FV= 17500, PMT=0, PV=?
Formula,
Fv= pv(1+I)^n
Therefore, Pv=FV/(1+I)^N
=17500/(1.025)4,
=17500/1.103812891
=15854.13628
=15854 is the initial amount need to be invested.