Vannoy Corporation will invest $25,000 every January 1st for the six years
(2010-2015). If Wagner will earn 12% on the investment, what amount will be in the investment on December 31, 2015? A) $102,785 B)$115,120 C) $202,880 D) $227,225
To find the amount in the investment on December 31, 2015, we can use the formula for the future value of an annuity.
The future value of an annuity formula is:
FV = PMT * [(1 + r) ^ n - 1] / r
Where:
FV = Future value of the annuity
PMT = Payment amount made at the end of each period (annually in this case)
r = Interest rate per period (12% annual interest rate in this case)
n = Number of periods (6 years in this case)
Substituting the given values into the formula:
FV = $25,000 * [(1 + 0.12) ^ 6 - 1] / 0.12
Calculating the expression inside the brackets first:
[(1 + 0.12) ^ 6 - 1] = [1.12 ^ 6 - 1] = [1.948717 - 1] = 0.948717
Now substituting the calculated value back into the formula:
FV = $25,000 * 0.948717 / 0.12
FV = $23717.93
Therefore, the amount in the investment on December 31, 2015, will be approximately $23,717.93.
None of the provided answer choices match the calculated value. Please double-check the options or provide additional information if available.