Exercise 5-12 (Algo) Future value; annuities [LO5-7]

A company plans to make four annual deposits of $2,750 each to a special building fund. The funds assets will be invested in mortgage instruments expected to pay interest at 12% on the funds balance.

Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)

Required:

Determine how much will be accumulated in the fund after four years under each of the following situations:

1. The $2,750 annual deposit are made at the end of each of the four years and interest is compounded annually.
2. The $2,750 annual deposit are made at the beginning of each of the four years and interest is compounded annually.
3. The $2,750 annual deposit are made at the beginning of each of the four years and interest is compounded quarterly.
4. The $2,750 annual deposit are made at the beginning of each of the four years interest is compounded annually, and interest earned is withdrawn at the end of each year.