Question

Vaughn Manufacturing will invest $93000 every January 1st for the next six years (2017 – 2022)....

Vaughn Manufacturing will invest $93000 every January 1st for the next six years (2017 – 2022). If Vaughn will earn 14% on the investment, what amount will be in the investment fund on December 31, 2022?

Homework Answers

Answer #1
Value of investment fund on December 31, 2022 $ 9,04,935.70
Working:
Future value of annuity of 1 = ((((1+i)^n)-1)/i)*(1+i) Where,
= ((((1+0.14)^6)-1)/0.14)*(1+0.14) i 14%
= 9.730491366 n 6
Future value of cash flow = Annual cash flow * Future value of annuity of 1
= $           93,000 * 9.730491
= $ 9,04,935.70
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