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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Future Value Hugh Colson deposited $20,000 in a special savings account that provides for interest at the annual rate of 12% compounded semiannually if the deposit is maintained for 4 years.

Required:

Calculate the balance of the savings account at the end of the 4-year period.

To determine

Determine the amount of balance available in the savings account at the end of 4 year period.

Explanation

Future Value of a single sum: The future value is value of single present amount (single sum) compounded at an interest rate until a particular future date.

Determine the amount of balance available in the savings account at the end of 4 year-period.

Future value =Cash flow × (fn=8,i=6%)=$20,000×1.593848=$31,876.96

Therefore, the amount of balance available in the savings account at the end of 4 year period is $31,876

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