In order to establish a contingency fund to replace equipment after unexpected breakdowns, a manufacturer of thin-wall plastic bottles plans to deposit $100,000 now and $150,000 two years from now into an investment account. Assuming the account grows at 15% per year, the equation that does not represent the future value of the account in year 5 is: (a) F = 100,000(F∕P,15%,5) + 150,000(F∕P,15%,3) (b) F = [100,000(F∕P,15%,2) + 150,000] (F∕P,15%,3) (c) F = [100,000 + 150,000(P∕F,15%,2)] (F∕P,15%,5) (d) F = 100,000(F∕P,15%,5) + 150,000(F∕P,15%,2)
In order to establish a contingency fund to replace equipment after unexpected breakdowns, a manufacturer of thin-wall plastic bottles plans to deposit $100,000 now and $150,000 two years from now into an investment account. Assuming the account grows at 15% per year, the equation that does not represent the future value of the account in year 5 is: (a) F = 100,000(F∕P,15%,5) + 150,000(F∕P,15%,3) (b) F = [100,000(F∕P,15%,2) + 150,000] (F∕P,15%,3) (c) F = [100,000 + 150,000(P∕F,15%,2)] (F∕P,15%,5) (d) F = 100,000(F∕P,15%,5) + 150,000(F∕P,15%,2)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
In order to establish a contingency fund to replace
equipment after unexpected breakdowns, a manufacturer
of thin-wall plastic bottles plans to deposit
$100,000 now and $150,000 two years from
now into an investment account. Assuming the
account grows at 15% per year, the equation that
does not represent the
in year 5 is:
(a) F = 100,000(F∕P,15%,5) +
150,000(F∕P,15%,3)
(b) F = [100,000(F∕P,15%,2) + 150,000]
(F∕P,15%,3)
(c) F = [100,000 + 150,000(P∕F,15%,2)]
(F∕P,15%,5)
(d) F = 100,000(F∕P,15%,5) +
150,000(F∕P,15%,2)
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