Starr Company decides to establish a fund that it will use 5 years from now to...

Starr Company decides to establish a fund that it will use 5 years from now to replace an aging production facility. The company will make a $97,000 initial contribution to the fund and plans to make quarterly contributions of $48,000 beginning in three months. The fund earns 8%, compounded quarterly. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided. Round your "Table Factor" to 4 decimal places and final answer to the nearest whole dollar.)

What will be the value of the fund 5 years from now?

Table Values are Based on:
n =
i =
	Present Value	Table Factor	Future Value
Initial Investment
Periodic Investments
Future Value of Fund

Expert Solution

Table values are based on:
n=	20
i=	2%


		Present Value	Table Factor	Future Value
Initial investment		$ 97,000	1.4859	$ 1,44,132
Periodic investment		$ 48,000	24.2974	$ 11,66,275
Future Value of fund				$ 13,10,408

Working:

# 1	Future Value of investment of 1				=	(1+i)^n
					=	(1+0.02)^20
					=	1.4859

# 2	Future value of annuity of 1				=	(((1+i)^n)-1)/i
					=	(((1+0.02)^20)-1)/0.02
					=	24.2974

ekkarill92 answered 3 months ago

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