Computing Future Values (Supplement C) – On January 1, 2011, Spearfish Company completed the following transactions (use an 8 percent annual interest rate for all transactions):

a. Deposited $50,000 in a debt retirement fund. Interest will be computed at six-month intervals and added to the fund at those times (i.e., semiannual compounding). ( Hint: Think carefully about n and i. )

b. Established a pension retirement fund to be available by the end of year 6 by making six annual deposits of $130,000 at year-end, starting on December 31, 2011.

c. Deposited $250,000 in a debt retirement fund. Interest will be computed annually and added to the fund at those times.

Required:

1. In transaction ( a ), what will be the balance in the fund at the end of year 3? What is the total amount of interest revenue that will be earned?

2. In transaction ( b ), what is the amount of the retirement fund at the end of year 6? What is the total amount of interest revenue that will be earned?

3. In transaction ( c ), what will be the balance in the fund at the end of year 6? What is the total amount of interest revenue that will be earned?

 

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Deposited $250,000 in a debt retirement fund. Interest will be computed annually and added to the… was first posted on July 4, 2020 at 9:33 am.
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