Concord Corporation will invest $73000 every January 1st for the next six years (2020 – 2025)....

Concord Corporation will invest $73000 every January 1st for the next six years (2020 – 2025). If Concord will earn 8% on the investment, what amount will be in the investment fund on December 31, 2025?

Expert Solution

Answer

$5,78,390

Step-by-step explanation

Future Value of an Annuity Due

= C*[(1+i)^n-1]/i] (1+i)

Where,

c= Cash Flow per period

i = interest rate per period

n=number of period

= $73000[ (1+0.08)^6 -1 /0.08] × (1 +0.08)

= $73000[ (1.08)^6 -1 /0.08] × 1.08

= $73000[ (1.5869 -1 /0.08] × 1.08

= $730,000 × 7.92315

= $5,78,390

ekkarill92 answered 2 years ago

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