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The owner of Termites Inc. plans to deposit $15,000 at the end of each year for 10 years into an investment account. One investment would pay 5% per year, and he assumes a stock fund would continue to yield 10% per year. Find the future value of both.

Respuesta :

SaniShahbaz

Answer:

  • The Future vale of investment account is = $188668.35
  • The Future vale of stock fund account is = $239061.30

Step-by-step explanation:

To determine:

Finding the future value of both?

Information Fetching and Solution Steps:

  • Money deposit at the end of each year for 10 = $15,000
  • Number of years = 10
  • The rate of one investment per year = 5%
  • The rate of stock fund per year = 10%

Using the formula  

[tex]FV=P\cdot \frac{(1+r)^n-1}{r}[/tex]

[tex]where,[/tex]

[tex]P =[/tex] Periodic money

[tex]r =[/tex] rate per period

[tex]n =[/tex] number of periods

[tex]So,[/tex]

The Future vale of investment account:

[tex]FV=15000\cdot \frac{(1+0.05)^{10}-1}{0.05}[/tex]

[tex]FV=15000(12.57789)[/tex]    ∵ [tex]\frac{(1+0.05)^{10} -1}{0.05}=12.57789[/tex]

[tex]FV=188668.35[/tex]

Hence, the Future vale of investment account  = $188668.35

Similarly,

The Future vale of stock fund account:

[tex]FV=15000\cdot \frac{(1+0.10)^{10}-1}{0.10}[/tex]

[tex]FV=15000(15.93742)[/tex]    ∵ [tex]\frac{(1+0.05)^{10} -1}{0.05}=15.93742[/tex]

[tex]FV=239061.30[/tex]

Hence, the Future vale of stock fund account = $239061.30

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