Riley will have $2,706

Accounting May 21, 2021

Riley will have $2,706.86 in a savings bonds. If the bonds earn 6.75% interest compounded semi-annually, how much will Riley have to invest to earn this amount in 15 years?

Expert Solution

Computation of Amount of Investment or Present Value:

Present Value = Future Value/(1+Interest Rate)^Time

= $2,706.86 / (1+6.75%/2)^(15 years*2)

= $2,706.86/2.706859

Present Value = $1,000

So, Riley will have to invest $1,000 today to earn this amount in 15 years.

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