Question

This morning, TL Trucking invested $75,000 to help fund a company expansion project planned for 4 years from now. How much additional money will the firm have 4 years from now if it can earn 5 percent rather than 4 percent on its savings?

Answer 1

Answer:

Additional money, the firm have 4 years from now if it can earn 5 percent rather than 4 percent on its savings will be $3,423.

Explanation:

Principal Amount = P = $75,000

Number of year = n = 4 years

If rate of return is 4%

A  = P ( 1 + r )^n

A = $75,000 ( 1 + 0.04 )^4

A = $75,000 x 1.16986

A = $87,740

If rate of return is 5%

A  = P ( 1 + r )^n

A = $75,000 ( 1 + 0.05 )^4

A = $75,000 x 1.21551

A = $91,163

Additional Amount Earned = $91,163 - $87,740 = $3,423