Question

One year ago, the Jenkins Family Fun Center deposited $3,500 in an investment account for the purpose of buying new equipment four years from today. Today, they are adding another $5,300 to this account. They plan on making a final deposit of $7,500 to the account next year. How much will be available when they are ready to buy the equipment, assuming they earn a 7 percent rate of return

Answer 1

Total FV= $21,043.97

Step-by-step explanation:

Giving the following information:

Interest rate= 7% compounded annually

To calculate the total accumulated future value, we need to use the following formula on each deposit:

FV= PV*(1+i)^n

Deposit 1= 3,500*1.07^5= 4,908.93

Deposit 2= 5,300*1.07^4= 6,947.22

Deposit 3= 7,500*1.07^3= 9,187.82

Total FV= $21,043.97