Question

Two years ago, the Fun Center deposited $3,200 in an investment account for the purpose of buying new equipment three years from today. Today, it is adding another $5,000 to this account. It plans on making a final deposit of $3,500 to the account next year. How much will be available when it is ready to buy the equipment, assuming the account earns a rate of return of 6.85 percent

Answer 1

$14,552.21

Step-by-step explanation:

The formula to compute the future value is shown below:

Future value = Present value × (1 + rate)^number of years

= $3200 × (1 + 0.0685)^5 + $5,000 × (1 + 0.0685)^3 + $3,500 × (1 + 0.0685)^2

= $4,456.79 + $6,099.49 + $3,995.92

= $14,552.21

Simply we applied the above formula so that the present value could come by considering the time period, present value, and the interest rate