FUTURE VALUES AND LONG-TERM INVESTMENTS. Pueblo Pottery, Inc., engaged in the following transactions during 19x2:

a) On January 1, 19x2, Pueblo deposited $12,000 in a certificate of deposit paying 6%

interest compounded semiannually (3% per 6-month period). The certificate will mature on December 31, 19x5.

b) On March 15, 19x2, Pueblo established an account with Durango Investment Management. Pueblo will make quarterly payments of $2,500 to Durango beginning on March 31, 19x2, and ending on December 31, 19x3. Durango guarantees an interest rate of 8% compounded quarterly (2% per 3-month period).

REQUIRED:

1. Prepare the cash flow diagram for each of these two investments.

2. Calculate the amount to which each of these investments will accumulate at maturity.

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