One year ago, the Jenkins family fund center deposited $4,900 in an investment a

ID: 2777032 • Letter: O

Question

One year ago, the Jenkins family fund center deposited $4,900 in an investment account for the purpose of buying new equipment four years from today. Today, they are adding another $6,700 to this account. They plan on making a final deposit of $8,900 to the account next year. How much would be able when they are ready to buy the equipment assuming the earn a 6 percent rate of return?
-$24,899.62 -$25,615.94 -$23,103.06 -$24,372.83 -$24,325.49 One year ago, the Jenkins family fund center deposited $4,900 in an investment account for the purpose of buying new equipment four years from today. Today, they are adding another $6,700 to this account. They plan on making a final deposit of $8,900 to the account next year. How much would be able when they are ready to buy the equipment assuming the earn a 6 percent rate of return?
-$24,899.62 -$25,615.94 -$23,103.06 -$24,372.83 -$24,325.49
-$24,899.62 -$25,615.94 -$23,103.06 -$24,372.83 -$24,325.49

Explanation / Answer

Calculation of future value of investment:

FVF (6%)

At the end of year 5

Year

Investment (IN)

Calculation

FVF

FV = IN *FVF

Year 0

$ 4,900

(1+6%)^5

1.338225578

$ 6,557.31

Year 1

$ 6,700

(1+6%)^4

1.26247696

$ 8,458.60

Year 2

$ 8,900

(1+6%)^3

1.191016

$ 10,600.04

Total Future value at the end of year 5 (4 years from now)

$ 25,615.94