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One year ago, the Jenkins Family Fun Center deposited $4,900 into an investment account for the purpose of buying new equipment four years from today. Today, they are adding another $6,700 to this account. They plan on making a final deposit of $8,900 to the account next year. How much will be available when they are ready to buy the equipment, assuming they earn a rate of return of 6 percent?

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Answer:

The available amount will be $21,730

Explanation:

To calculate this, we first of all have to compute the total deposit into the account, and add the 6% rate of return to get the total amount.

Total amount deposited = 4,900 + 6,700 + 8,900 = $20,500

6% rate of return = 6% of $20,500

= 0.06 × 20,500 = $1,230

Therefore total amount available = amount deposited + rate of return

= $20,500 + 1,230 = $21,730

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