Wagner Corporation will invest $25,000 every January 1st for the next six years (2006 - 2011).If Wagner will earn 12% on the investment, what amount will be in the investment fund on December 31, 2011?

Question

Quizplus · Accepted Answer

To solve this problem, we will use the formula for the future value of an annuity:

FV = PMT x [(1 + r)n – 1] / r

Where:
FV = Future Value
PMT = Payment per period
r = Interest rate per period
n = Number of periods

Plugging in the given values, we get:

FV = $25,000 x [(1 + 0.12)6 – 1] / 0.12
FV = $227,224.94

Therefore, the amount in the investment fund on December 31, 2011 will be $227,225. Answer choice D is the correct answer.

Wagner Corporation Will Invest $25,000 Every January 1st for the Next