GMG Studios plans to invest $55,000 at the end of each year for the next five ye
ID: 2570590 • Letter: G
Question
GMG Studios plans to invest $55,000 at the end of each year for the next five years. There are three investment options available. Interest Period Annual Rate Compounded Invested Option 1 Option 2 Option 3 Annually Annually Annually 5 years 5 years 5 years 5% 10 Required: Determine the accumulated investment amount by the end of the fifth year for each of the options. (FV of S1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided Round your answers to 2 decimal places.) Accumulated investment amount Option 1 Option 2 Option 3Explanation / Answer
Option 1 : Annual interest Rate = 5% Per Annum Years Invested amount Interest Rate @ 5% Cumulative Balances 1 $ 55,000.00 $ - $ 55,000.00 2 $ 55,000.00 $ 2,750 $ 1,12,750.00 3 $ 55,000.00 $ 5,638 $ 1,73,387.50 4 $ 55,000.00 $ 8,669 $ 2,37,056.88 5 $ 55,000.00 $ 11,853 $ 3,03,909.72 Option 2 : Annual interest Rate = 7% Per Annum Years Invested amount Interest Rate @ 7% Cumulative Balances 1 $ 55,000.00 $ - $ 55,000.00 2 $ 55,000.00 $ 3,850 $ 1,13,850.00 3 $ 55,000.00 $ 7,970 $ 1,76,819.50 4 $ 55,000.00 $ 12,377 $ 2,44,196.87 5 $ 55,000.00 $ 17,094 $ 3,16,290.65 Option 3 : Annual interest Rate = 10 % Per Annum Years Invested amount Interest Rate @ 10% Cumulative Balances 1 $ 55,000.00 $ - $ 55,000.00 2 $ 55,000.00 $ 5,500 $ 1,15,500.00 3 $ 55,000.00 $ 11,550 $ 1,82,050.00 4 $ 55,000.00 $ 18,205 $ 2,55,255.00 5 $ 55,000.00 $ 25,526 $ 3,35,780.50 Accumulated investement amount Option 1 $ 3,03,909.72 Option 2 $ 3,16,290.65 Option 3 $ 3,35,780.50
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