Future Value of a Deferred Annuity. Lenny Shafer Bakery and Co. budgeted $350,000 to build a factory 10 years from today. Shafer will finance the project by making six equal annual deposits of $50,000 at the end of each year commencing four years from today. The company can invest in a financial instrument earn- ing 5%. Interest is compounded annually. Will Shafer have sufficient funds to pay for the $350,000 factory at the end of the 10-year period?
Future Value of a Deferred Annuity. Lenny Shafer Bakery and Co. budgeted $350,000 to build a factory 10 years from today. Shafer will finance the project by making six equal annual deposits of $50,000 at the end of each year commencing four years from today. The company can invest in a financial instrument earn- ing 5%. Interest is compounded annually. Will Shafer have sufficient funds to pay for the $350,000 factory at the end of the 10-year period?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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E7-13 | |||||
PMT | PERIOD | TYPE | INTEREST | PV | |
20,000 | 8 | 1 | 4% | ? | |
PV= | ($140,041.09) |
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