contestada

On March 15, Year 1, Kathleen Corp. adopted a plan to accumulate $1,000,000 by September 1, Year 5. Kathleen plans to make 4 equal annual deposits to a fund that will earn interest at 10% compounded annually. Kathleen made the first deposit on September 1, Year 1. Future value and future amount factors are as follows:

Future value of $1 at 10% for 4 periods


1.46


Future amount of ordinary annuity of $1


at 10% for 4 periods


4.64


Future amount of annuity in advance of $1


at 10% for 4 periods


5.11


Kathleen should make 4 annual deposits (rounded) of

A. $250,000

B. $195,700

C. $684,930

D. $215,500

Respuesta :

jepessoa

Answer:

B) $195,700

Explanation:

  • Future value of $1 at 10% for 4 periods  = 1.46
  • Future amount of ordinary annuity of $1  at 10% for 4 periods  = 4.64
  • Future amount of annuity in advance of $1  at 10% for 4 periods  = 5.11

Since Kathleen Corp. is depositing the money in advance, she must use the future amount of annuity in advance = 5.11 in order to determine the future value of the 4 deposits:

$250,000  x 5.11 = $1,277,500

$195,700  x 5.11 = $1,000,027

$684,930  x 5.11 = $3,499,992

$215,500 x 5.11 = $1,101,205

Otras preguntas