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?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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E7-13          
           
           
  PMT PERIOD TYPE INTEREST PV
  20,000 8 1 4% ?
           
           
PV= ($140,041.09)        
E7-12. 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?
Transcribed Image Text:E7-12. 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?
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