The Government has imposed a ﬁne on the Not-So-Legal Company. The ﬁne calls for annual payments of $100,000, $250,000, and $250,000, respectively over the next three years. The ﬁrst
Payment is due one year from today. The government plans to invest the funds until the ﬁnal
Payment is collected and then donate the entire amount, including investment earnings, to a
National health center. The Government will earn 3.5% on the funds held. How much will the
National health center receive three years from today?

Question

Quizplus · Accepted Answer

The future value of each payment is calculated using the formula for future value of a single sum: FV = PV * (1 + r)^n. The future value of the first payment ($100,000) after 3 years is $100,000 * (1.035)^2 = $107,122.50. The future value of the second payment ($250,000) after 2 years is $250,000 * (1.035)^1 = $258,750. The future value of the third payment ($250,000) after 1 year is $250,000 * (1.035)^0 = $250,000. Adding these amounts gives $107,122.50 + $258,750 + $250,000 = $615,872.50.

The Government Has Imposed a ﬁNe on the Not-So-Legal Company