Solve the problem. Round to the nearest cent.Southwest Dry Cleaners believes that it will need new equipment in 7 years. The equipment will cost $26,000. What lump sum should be invested today at 6%, compounded semiannually, to yield $26,000?

Use the present-value formula: divide the future cost by (1 + periodic interest rate) raised to the number of compounding periods. The rate per half-year is 6% ÷ 2 = 3%, and there are 7 × 2 = 14 periods. Thus, $26,000 ÷ 1.03¹⁴ ≈ $17,189.06, so the lump sum to invest today is $17,189.06.

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