Question

Exercise A3-14
Future Values and Long-Term Investments

Use Future Value Tables or your calculator to complete the requirement below.

Portman Corporation engaged in the following transactions during 2020:

1. On January 1, 2020, Portman 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, 2023.
2. On January 1, 2020, Portman established an account with Lee County Bank. Portman will make quarterly payments of $2,500 to Lee beginning on March 31, 2020, and ending on December 31, 2021. Lee guarantees an interest rate of 8% compounded quarterly (2% per 3-month period).

Required:

1. Complete the information needed to prepare a cash flow diagram for each of these two investments.

a.	n =	semi-annual periods
	i =	% per 6-month period

Amount of Payment or Deposit	1/1/20	12/31/23
	$

b.	n =	quarterly periods
	i =	% per quarter

Amount of Payment or Deposit
3/31/20	6/30/20	9/30/20	12/31/20		12/31/21
$	$	$	$	. . .

2. Calculate the amount to which each of these investments will accumulate at maturity. Round your answers to the nearest cent.

a.	Future value	$
b.	Future value of annuity	$

Answer 1

no. of minche inl. 4 years 212 months x 2 times a (a Pruent valuie my amount deperited - $19.000 -Annual interur rate ci) -6. Interest rate for a months = c 3% + 1 - 8 2 year 0.96 fuccure Value od amount departed at an annual interest rate of es compounded semiannually's caladalıd ai tellus Future Value · Pruent Value CI+ interest) EV PUCI+15? FV . $12000 (140-03) 96 FV e $12.000 (1.03) FV - 412000 x 11.08 FV. $ 204,960 Future Value amount deposited by Portman at annual interest rate of 61.com pourdid Lemi annually is $ 2049 CO. (6) Amouent to be suported quarterly - $2500 Interest rate for one quarter - £% - 2.1. Future value of annuity calcuated feluru: FU - $2500 * (0*0.022] $2500 x - $2.500 (12 RV - $21,500 Future Value of annuity nehen Portman ideperito $3500 quarterly at an interest rate of e% comprunded quarterly in 31|12|2021 is $21,500. 01.02) 0.02 1/1