One year ago, the Jenkins Family Fun Center deposited $4,100 in an investment ac
ID: 2653071 • Letter: O
Question
One year ago, the Jenkins Family Fun Center deposited $4,100 in an investment account for the purpose of buying new equipment four years from today. Today, they are adding another $5,900 to this account. They plan on making a final deposit of $8,100 to the account next year. How much will be available when they are ready to buy the equipment, assuming they earn a 9 percent rate of return?
$25,126.42
$24,102.83
$22,462.04
$23,376.02
$24,132.69
One year ago, the Jenkins Family Fun Center deposited $4,100 in an investment account for the purpose of buying new equipment four years from today. Today, they are adding another $5,900 to this account. They plan on making a final deposit of $8,100 to the account next year. How much will be available when they are ready to buy the equipment, assuming they earn a 9 percent rate of return?
Explanation / Answer
Answer:
Calculation for future value of investment :
Future value of $4100 Investment for 5 years = 4100*(1+0.09)^5 = 4100 * 1.538624 = $6308.36
Future value of $5900 Investment for 4 years = 5900*(1+0.09)^4 = 5900 * 1.41158 = $8328.33
Future value of $8100 Investment for 3 years = 8100*(1+0.09)^3 = 8100 * 1.295029 = $10489.73
Hence Total Future value = $25126.41
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