Exercise A3-14 Future Values and Long-Term Investments

Use Future Value Tables or your calculator to complete the requirement below.

Portman Corporation engaged in the following transactions during 2020:

1. On January 1, 2020, Portman deposited $12,000 in a certificate of deposit paying 6% interest compounded semiannually (3% per 6-month period). The certificate will mature on December 31, 2023.
2. On January 1, 2020, Portman established an account with Lee County Bank. Portman will make quarterly payments of $2,500 to Lee beginning on March 31, 2020, and ending on December 31, 2021. Lee guarantees an interest rate of 8% compounded quarterly (2% per 3-month period).

Required:

1. Complete the information needed to prepare a cash flow diagram for each of these two investments.

a.	n =	semi-annual periods
	i =	% per 6-month period

Amount of Payment or Deposit	1/1/20	12/31/23
	$

b.	n =	quarterly periods
	i =	% per quarter

Amount of Payment or Deposit
3/31/20	6/30/20	9/30/20	12/31/20		12/31/21
$	$	$	$	. . .

2. Calculate the amount to which each of these investments will accumulate at maturity. Round your answers to the nearest cent.

a.	Future value	$
b.	Future value of annuity	$