After graduation,you plan to work for Dynamo Corporation for 12 years and then start your own business.You expect to save and deposit $7,500 a year for the first 6 years and $15,000 annually for the following 6 years,with the first deposit being made a year from today.In addition,your grandfather just gave you a $25,000 graduation gift,which you will deposit immediately.If the account earns 9%,compounded annually,how much will you have when you start your business 12 years from now?
A)$238,176
B)$250,712
C)$263,907
D)$277,797

Question

Quizplus · Accepted Answer

The future value of the deposits and the gift can be calculated using the future value of an annuity formula and the future value of a lump sum. The future value of the $25,000 gift after 12 years is $25,000 * (1 + 0.09)^12. The future value of the first 6 years of $7,500 deposits is calculated using the future value of an annuity formula for 6 years, compounded for an additional 6 years. The future value of the next 6 years of $15,000 deposits is calculated using the future value of an annuity formula for 6 years. Adding these values gives the total amount available after 12 years, which is approximately $277,797.

After Graduation,you Plan to Work for Dynamo Corporation for 12