Question

One year ago, JK Mfg. deposited $20,839 in an investment account for the purpose of buying new equipment four years from today. Today, it is adding another $22872 to this account. The company plans on making a final deposit of $20,217 to the account one year from today. How much will be available when it is ready to buy the equipment, assuming the company earns 10.91% APR on its invest funds?

Answer 1

Here is a step-by-step explanation for your problem:

Step 1: Calculate the amount of the first deposit after one year

First deposit: $20,839

Interest earned on first deposit: (20,839 x 10.91%) = $2,269.82

Total amount after one year: 20,839 + 2,269.82 = $23,108.82

Step 2: Calculate the amount of the second deposit after one year

Second deposit: $22,872

Interest earned on second deposit: (22,872 x 10.91%) = $2,511.33

Total amount after one year: 22,872 + 2,511.33 = $25,383.33

Step 3: Calculate the amount of the final deposit after one year

Final deposit: $20,217

Interest earned on final deposit: (20,217 x 10.91%) = $2,214.93

Total amount after one year: 20,217 + 2,214.93 = $22,432.93

Step 4: Calculate the total amount available after four years

Total amount available after four years = 23, 108.82 + 25,383.33 + 22,432.93 = $71,925.08