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30 July, 14:54

A charity plans to invest annual payments of $60,000, $70,000, $75,000, and $50,000, respectively, over the next four years. The first payment will be invested one year from today.

Assuming the investment earns 5.5 percent annually, how much will the charity have available four years from now?

a) $263,025 b) $328,572 c) $236,875 d) $277,491 e) $285,737

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  1. 30 July, 15:18
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    The correct answer is D.

    Explanation:

    Giving the following information:

    A charity plans to invest annual payments of $60,000, $70,000, $75,000, and $50,000

    We need to use the following formula for each deposit:

    FV = PV * (1+i) ^n

    Deposit 1 = 60,000 * (1.055) ^3 = $70,454.48

    Deposit 2 = 70,000 * (1.055^2) = $77,911.75

    Deposit 3 = 75,000 * (1.055) = $79,125

    Deposit 4 = 50,000

    Total = $277,491.23
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