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One year ago, Deltona Motor Parts deposited $16,500 in an investment account for the purpose of buying new equipment three years from today. Today, it is adding another $12,000 to this account. The company plans on making a final deposit of $20,000 to the account one year from today.
How much will be available when it is ready to buy the equipment, assuming the account pays 5.5% interest?

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Answer:

At the end of the fourth year period, the total amount will be of: $56,792.01

Explanation:

Giving the following information:

One year ago, Deltona Motor Parts deposited $16,500 in an investment account to buy new equipment three years from today. Today, it is adding another $12,000 to this account. The company plans on making a final deposit of $20,000 to the account one year from today.

To calculate the ending amount of money, we need to use the following formula dor each deposit:

FV= PV*(1+i)^n

Therefore:

FV= 16,500*(1.055)^4= $20,440.61

FV= 12,000*(1.055)^3= $14,090.90

FV= 20,000*(1.055)^2= $22,260.5

Total= $56,792.01

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