Terry and Jessica Benedict invested $5,700 in a savings account paying 5% annual
ID: 2426736 • Letter: T
Question
Terry and Jessica Benedict invested $5,700 in a savings account paying 5% annual interest when their daughter, Kristi, was born. They also deposited $1,200 on each of her birthdays until she was 18 (including her 18th birthday).
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(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
How much was in the savings account on her 18th birthday (after the last deposit)? (Round answer to 2 decimal places, e.g. 25.25.)
Ekman Company issued $1,300,000, 11-year bonds and agreed to make annual sinking fund deposits of $72,500. The deposits are made at the end of each year into an account paying 8% annual interest.
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(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
What amount will be in the sinking fund at the end of 11 years? (Round answer to 2 decimal places, e.g. 25.25.)Elmdale Company is considering an investment that will return a lump sum of $769,700, 7 years from now.
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(For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
What amount should Elmdale Company pay for this investment to earn a 12% return? (Round answer to 2 decimal places, e.g. 25.25.)
$
Explanation / Answer
Please find the detailed answer as follows:
Future Value of 6000 after 18 Years = 6000*FVIF(18,4%) = 6000* 2.02582 = 12154.92
+ Future Value of 1000 Annual Deposit = 1000*FVIFA(18,4%) = 1000*25.64541 = 25645.41
Total Value = 12154.92 + 25645.41 = $37800.33
Answer is $37800.33.
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