On January 1, 2004, Carly Company decided to begin accumulating a fund for asset

Question

On January 1, 2004, Carly Company decided to begin accumulating a fund for asset replacement five years later. The company plans to make five annual deposits of $30,000 at 9% each January 1 beginning in 2004. What will be the balance in the fund, within $10, on January 1, 2009 ( one year after the last deposit)? The following 9% Interest factors may be used.
Present Value of Ordinary Annuity Future Value of Ordinary Annuity
4 periods 3.2397 4.5731
5 periods 3.8897 5.9847
6 periods 4.4859 7.5233

a. $195,699
b. $179,541
c. $163,500
d. $150,000

Explanation / Answer

In excel use FV function

FV(rate,nper,-PMT,PV,type)

FV(.09,5,-30000,0,1) = $195,700

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