Exercise C 6 Calculate the future value of an annuity (LOC-3) GMG Studios plans

Question

Exercise C 6 Calculate the future value of an annuity (LOC-3) GMG Studios plans to invest $45,000 at the end of each year for the next tour years. There are three investment options avalable. Interest Period Option 1 Option 2 Option 3 Annual Rate Compounded Invested 4 years 4years years 6% Annually Annually Annually 12 Required: Determine the accumulated investment amount by the end of the fourth year tor each of the options. (Ey of $1. evot $1. provided. Round your answers to 2 decimal places Accumulated investment emount Option 1 Option 2 Option 3 References eBook & Resources

Explanation / Answer

1) Accumulated Investment amount Option 1 (45000*FVIFA @6%, 4 years) 208669.18 (45000*4.6371) Option 2 (45000*FVIFA @8%, 4 years) 218997.04 (45000*4.8667) Option 3 (45000*FVIFA @12%, 4 years) 240878.13 (45000*5.3528) 2) 1-a) Present Value Store 1 2900 Store 2 (3100*PVIF @ 9%, 1 year) 2844 (3100*0.9174) 1-b) Store 2 (because the present value of payment of store 2 is less than store 1)

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