Question

Cline Corporation deposits $75000 every quarter in a savings account ( beginning at the end of the current quarter) for the next 5 years so that it can purchase a new piece of machinery at the end of five years. the interest rate is 12%. How much money will the Cline Corp have at the end of 5 years?

Answer 1

Information provided:

Quarterly deposit= $75,000

Time= 5 years*4= 20 quarters

Interest rate= 12%/4= 3% per quarter

The money that Clive Corp will have at the end of 5 years is computed by calculating the future value.

Enter the below in a financial calculator to compute the future value:

PMT= 75,000

N= 30

I/Y= 3

Press the CPT key and FV to compute the money that Clive Corp will have at the end of 5 years.

The value obtained is 2,015,278.09.

Therefore, Clive Corp will have $2,015,278.09 at the end of 5 years.

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