Question

Hao made a single investment which, after 6 years invested at 10% compounded semiannually, has accumulated...

Hao made a single investment which, after 6 years invested at 10% compounded semiannually, has accumulated to $232,900. How much did Hao invest initially?

A. $232,893

B. $172,583

C. $230,252

D. $129, 679

E. $14,070

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Homework Answers

Answer #1

The correct answer would be Option D - $129,679

To find out the initial investment made by Hao we will use the formula

A = P (1 + i)n

Where,

A = $ 232,900

Let P or principal amount be X

i = 10 / 2 or 5% as it is compounded semi annually

n = 6 * 2 = 12 since the compunding is semi annually

Therefore using the formula we get

232,900 = X ( 1 + 0.05 )12

$232,900 = 1.796 X

X = $232,900 / 1.796

X = $129,679 (rounded off)

Therefore the amount initially invested = $ 129,679

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