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A company plans to make four annual deposits of $$3,750$ each to a special building fund. The fund$$s assets will be invested in mortgage instruments expected to pay interest at $12\%$ on the fund$$s balance.

Note: Use tables, Excel, or a financial calculator. $($FV of $$1,$ PV of $$1,$ FVA of $$1,$ PVA of $$1,$ FVAD of $$1$ and PVAD of $$1)$

Required:

Determine how much will be accumulated in the fund after four years under each of the following situations:

The $$3,750$ annual deposit are made at the end of each of the four years and interest is compounded annually.

The $$3,750$ annual deposit are made at the beginning of each of the four years and interest is compounded annually.

The $$3,750$ annual deposit are made at the beginning of each of the four years and interest is compounded quarterly.

The $$3,750$ annual deposit are made at the beginning of each of the four years interest is compounded annually, and interest earned is withdrawn at the end of each year.

Answer rating: 100% (QA)

Answer Building Fund Accumulation Scenarios We can analyze the amount accumulated in the building fund after four years under different scenarios usin... View the full answer