Question

One year ago, JK Mfg. deposited $20,500 in an investment account for the purpose of buying new equipment four years from today. Today, it is adding another $15,000 to this account. The company plans on making a final deposit of $10,000 to the account one year from today. How much will be available when it is ready to buy the equipment, assuming the account pays 3.5 interest?

Answer 1

$52,647.60 will be available when the company is ready to purchase the equipment

Step-by-step explanation:

Given:

Amount deposited in the account in the previous year = $20,500

Amount deposited in the current year = $15,000

Amount deposited in the next year = $10,000

Amount deposited last year will yield interest for 5 years. Amount deposited today will yield interest for 4 years and the one deposited next year will yield interest for three years.

Amount available in the fifth year =
`20,500\left ( 1.035^(5) \right )+15,000\left (1.035 ^(4) \right )+10,000\left ( 1.035^(3) \right )`

=24,347.57 + 17,212.85 + 11,087.18

=$52,647.360