Question

homas is planning to start his own business in 10 years, at which time he will buy all the equipment and land needed. Currently Thomas is planning to budget deposits of $900,000 at the end of the seventh, eighth, ninth, and tenth periods. The fund will earn 10%. At the end of the tenth year, Thomas will have accumulated

Answer 1

Answer:

FV $4,594,590

Explanation:

The annuity which produce funds will start on the seventh year thereofre there will be 4 annual deposits at the beginning of each year.

We solve for the future value of an annuity-due of 4 year at 10% interest rate:

$C \times \frac{(1+r)^{time} -1}{rate}(1+r) = FV$

C 900,000.00

time 4

rate 0.1

$900000 \times \frac{(1+0.1)^{4} -1}{0.1}(1+0.1) = FV$

FV $4,594,590

This is the amount accumualted at the end of the tenth year