Jackie Rich would like to buy a $19,700 Toyota hybrid car in 5 years. Jackie wants to put the money aside now. Jackie’s bank offers 10% interest compounded semiannually.

How much must Jackie invest today?

Question

Jackie Rich would like to buy a $19,700 Toyota hybrid car in 5 years. Jackie wants to put the money aside now. Jackie’s bank offers 10% interest compounded semiannually.
     
How much must Jackie invest today?

anonymous · Answer

I don't have the calculator to do the exponents, but I can help you out to that point.

anonymous · Answer

The equation I looked up said A = P(1 + r/n) ^nt

anonymous · Answer

A is for ending amount so 19700
P is beginning amount which is unknown
r is interest rate (as decimal) so .1
n is number of compounds a year, so 2
t is total number of years
$$19700=P(1+\frac{ .1 }{ 2 })^{2(5)}$$

anonymous · Answer

thank you so much!

anonymous · Answer

Your welcome, but just in case it gave me another equation to help with this.  Do you think you will need it?

anonymous · Answer

$$\frac{ A }{ (1+\frac{ r }{ n })^{nt} }=P$$