A company that utilizes carbon fiber 3-D printing wants to have money available 2 years from now to add new equipment. The company currently has $650,000 in a capital account and it plans to deposit $200,000 now and another $200,000 one year from now. The total amount available in 2 years, provided it returns a compounded rate of 15% per year, is closest to:
(a) $1,354,100
(b) $1,324,100
(c) $1,125,125
(d ) $1,050,000
Amount available = total principal in year 0 + interest for 2 years + principal added year 1
+ interest for 1 year
= 850,000(1+0.15)² + 200,000 (1+0.15)
= 1,124,125 + 230,000
= $1,354,125
Answer is (a)
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