Question

Se Industries will need $2 2 mition 45 years from now to replace some equipment Currently, the firm has some extra cesh and would lke to establish s savings nccount for this purpone. The account pays 3 6 percent inserest.compounded annualy How much money must the company deposit today to fully fund the equipmert purchase? O $1679.94720 O $1798,40721 O st350068 47 O $1876.308.40 o $1,4030818 Alt AltE

Answer 1

D.$1,876,306.49

as per compound interest formula:

future amount = amount deposited *(1+interest rate)^time period

here,

future amount =$2.2 million

amount deposited = to be known

interest rate =3.6%=>0.036.

time period =4.5 years.

=>$2.2 million = amount deposited(1.036)^4.5

=>amount deposited = $2,200,000 / 1.172516328266.

=>$1,876,306.