Bulldog Gym, Inc. knows they will be facing an equipment bill of around $20,000 in 4 years. They have spoken to a few local banks and are weighing the following options. Bank 1: Invest $5,500 per year at 2% interest Bank 2: Invest $4,750 per year at 4% interest Bank 3: Invest $17,000 now at 5% interest What will the Bank 1 investment be in 4 years? Please include dollar signs, commas, and periods. What will the Bank 2 investment be in 4 years? Please include dollar signs, commas, and periods. What will the Bank 3 investment be in 4 years? Please include dollar signs, commas, and periods. What option will give the gym the most money to work with in 4 years?
Bulldog Gym, Inc. knows they will be facing an equipment bill of around $20,000 in 4 years. They have spoken to a few local banks and are weighing the following options. Bank 1: Invest $5,500 per year at 2% interest Bank 2: Invest $4,750 per year at 4% interest Bank 3: Invest $17,000 now at 5% interest What will the Bank 1 investment be in 4 years? Please include dollar signs, commas, and periods. What will the Bank 2 investment be in 4 years? Please include dollar signs, commas, and periods. What will the Bank 3 investment be in 4 years? Please include dollar signs, commas, and periods. What option will give the gym the most money to work with in 4 years?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:QUESTION 9
Bulldog Gym, Inc. knows they will be facing an equipment bill of around $20,000 in 4 years. They have spoken to a few local banks and are
weighing the following options.
Bank 1: Invest $5,500 per year at 2% interest
Bank 2: Invest $4,750 per year at 4% interest
Bank 3: Invest $17,000 now at 5% interest
What will the Bank 1 investment be in 4 years? Please include dollar signs, commas, and periods.
What will the Bank 2 investment be in 4 years? Please include dollar signs, commas, and periods.
What will the Bank 3 investment be in 4 years? Please include dollar signs, commas, and periods.
What option will give the gym the most money to work with in 4 years?
Expert Solution
Step 1: Define Future Value
Future value: It refers to the value of any asset, investment, or security at some point in future, given at a specified or particular interest rate. It is of utmost importance to financial planners and investors as they have a keen interest in knowing the value of their investment made today, in the future.
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