6. using table 11-2 from your text, calculate the present value (principal) and the compound interest given: compound amount = $1,250 term of investment = 6 years nominal rate = 6% interest is compounded semiannually

The Principal is $877.19    And  Compound Interest is $372.81  

Step-by-step explanation:

Given as :

Amount after investment = $1250

The time period of investment = 6 years

The nominal rate = 6% compounded semiannually

Let the principal = P

From compounded method

Amount = Principal ×

Or, $1250 = P ×

Or, $1250 = P ×

Or, $1250 = P × 1.425

∴   P =

I.e P = $877.19  

So , Principal = $877.19

Now, Compound Interest = Amount - Principal

                                          = $1250 - $877.19

Or,                                CI  = $372.81

Hence The Principal is $877.19    And  Compound Interest is $372.81  Answer

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