One year ago, the Jenkins Family Fun Center deposited $4,800 in an investment account for the purpose of buying new equipment four years from today. Today, they are adding another $6,600 to this account. They plan on making a final deposit of $8,800 to the account next year. How much will be available when they are ready to buy the equipment, assuming they earn a 9 percent rate of return?

a. $28,098.09

b. $26,935.83

c. $25,415.70

d. $27,185.42

e. $26,077.59

The correct answer is A.

Explanation:

Giving the following information:

One year ago, the Jenkins Family Fun Center deposited $4,800 in an investment account to buy new equipment four years from today. Today, they are adding another $6,600 to this account. They plan on making a final deposit of $8,800 to the account next year.

i = 0.09

To calculate the final value we need to use the following formula:

FV=PV * (1+i) ^n

First deposit = 4,800 * (1.09) ^5 = 7,385.39

Second deposit = 6,600 * (1.09) ^4=9,316.44

Third deposit = 8,800 * (1.09) ^3 = 11,396.26

Total = $28,098.09