(Q. 2 IN B) THE JOSHUA CO. PLANS ON SAVING MONEY TO BUY SOME NEW EQ...

1. (Q. 2 in B) The Joshua Co. plans on saving money to buy some new

equipment. The company is opening an account today with a deposit of $15,000

and expects To earn 4% interest annually. After 3 years, the firm wants to add

an additional $50,000 to the account. If the account continues and earns 4%

interest compounded semi-annually after 3 years, how much money will the

Joshua Co. have in their account five years from now?

A) $66,872.96

B) $68,249.79

C) $70,952.96

D) $72,385.44

Answer D

Using FV = PV × (1+r)^t formula

FV in 3yrs = $15,000 × (1 + 0.04) ^3 = $16,872.96

FV in 5 yrs = $(16,872.96 + 50,000) × (1 + 0.04 / 2)^ 4 = $72,385.44.