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15 September, 10:11

Karley's setting aside $32,000 each quarter, starting today, for the next three years for an expansion project. How much money will the firm have at the end of the three years if it can earn an average of 5.45 percent on its savings

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  1. 15 September, 10:14
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    Final Value = $414,135.43

    Explanation:

    Giving the following information:

    Quarterly deposit = $32,000

    Number of quarters = 3*4 = 12

    Interest rate = 0.0545/4 = 0.01363

    To calculate the final value, we need to use the following formula:

    FV = {A*[ (1+i) ^n-1]}/i

    A = quarterly deposit

    FV = {32,000*[ (1.01363^12) - 1]} / 0.01363

    FV = $414,135.43
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