Answer:
$1,419,327.22
Explanation:
The formula for calculating the Future Value (FV) of an Ordinary Annuity is used as follows:
FV = M × {[(1 + r)^n - 1] ÷ r} ................................. (1)
Where,
FV = Future value of the amount after 3 years = ?
M = Annuity payment = $225,000
r = Semi annual interest rate = 4% ÷ 2 = 2%, 0.02
n = number of periods the investment will be made = 3 × 2 = 6
Substituting the values into equation (1), we have:
FV = $225,000 × {[(1 + 0.02)^6 - 1] ÷ 0.02} = $1,419,327.22
Therefore, Harlan Corporation will have $1,419,327.22 at the end of three years.
