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Future Value Factors

On January 15, 2004, Grant Corp. adopted a plan to accumulate funds for environmental improvements beginning July 1, 2008, at an estimated cost of $2,500,000. Grant plans to make four equal annual deposits in a fund that will earn interest at 10% compounded annually. The first deposit was made on July 1, 2004. Future value factors are as follows:
Future value of 1 at 10% for 5 periods 1.61
Future value of ordinary annuity of 1 at 10% for 4 periods 4.64
Future value of annuity due of 1 at 10% for 4 periods 5.11
Grant should make four annual deposits of
a. $444,761.
b. $489,237.
c. $538,793.
d. $625,000.

Solution Preview

There will be four deposits: July 1, 2004, July 1, 2005, July 1, 2006, and July 1, 2007 and the ...

Solution Summary

This solution calculates the value of four annual deposits in order to accumulate enough funds for a future event.

$2.19