Shekhar plans to invest $1,820 in a mutual fund at the end of each of the next 3 years. If his opportunity cost rate is 4 percent compounded semiannually, how much will his investment be worth after the last annuity payment is made? Use the equation method to calculate the worth of the investment.

Shekhar plans to invest $1,820 in a mutual fund at the end of each of the next 3 years. If his opportunity cost rate is 4 percent compounded semiannually, how much will his investment be worth after the last annuity payment is made? Use the equation method to calculate the worth of the investment.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 6MC: You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years....

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Question

Shekhar plans to invest $1,820 in a mutual fund at the end of each of the next 3 years. If his
opportunity cost rate is 4 percent compounded semiannually, how much will his investment be
worth after the last annuity payment is made? Use the equation method to calculate the worth of
the investment.
note
Future value = Ordinary annuity x {[(1 + r)n - 1] / r}

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