Wiseman Video plans to make four annual deposits of $2,000 each to a special bui
ID: 2552367 • Letter: W
Question
Wiseman Video plans to make four annual deposits of $2,000 each to a special building fund. The fund's assets will be invested in mortgage instruments expected to pay interest at 12% on the fund's balance. Using the appro- priate annuity table, determine how much will be accumulated in the fund on December 31. 2021. under each of the following situations: 1. The first deposit is made on December 31. 2018, and interest is compounded annually 2. The first deposit is made on December 31. 2017, and interest is compounded annually evalue ies -6 3. The first deposit is made on December 31. 2017, and interest is compounded quarterly. 4. The first deposit is made on December 31. 2017, interest is compounded annually, and interest earned is withdrawn at the end of each year.Explanation / Answer
1.The first deposit is made on December 31 2018 and interest is compounded annually.
Payment : 2000 n= 4 years, rate of interest = 12%
FVA = 2000*4.7793 = $9559
2. The first deposit is made on December 31 2017 and interest is compounded annually
2000*5.3528 = $10706
3. The first deposit is made on December 31 2017 and interest is compounded quarterly
Deposit
Number of months
FV I = 3% (12M/4)
Future value
1
2000
16
1.60471
3209.42
2
2000
12
1.42576
2851.52
3
2000
8
1.26677
2533.54
4
2000
4
1.12551
2251.02
4. The first deposit is made on December 31 2017 and interest is compounded annually and interest earned is withdrawn at the end of each year
only principal left in the account because interest withdrawn after every year.
$2000*4 = $8000
Deposit
Number of months
FV I = 3% (12M/4)
Future value
1
2000
16
1.60471
3209.42
2
2000
12
1.42576
2851.52
3
2000
8
1.26677
2533.54
4
2000
4
1.12551
2251.02
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