One year ago, Deltona Motor Parts deposited $16,500 in an investment account for the purpose of buying new equipment three years from today. Today, it is adding another $12,000 to this account. The company plans on making a final deposit of $20,000 to the account one year from today. How much will be available when it is ready to buy the equipment, assuming the account pays 4.5 percent interest?

a. $53,408
b. $55,211
c. $55,997
d. $56,792
e. $57,232

The correct answer is B.

Explanation:

Giving the following information:

One year ago, Deltona Motor Parts deposited $16,500 in an investment account to buy new equipment three years from today. Today, it is adding another $12,000 to this account. The company plans on making a final deposit of $20,000 to the account one year from today.

To calculate the future value of the investment, we need to use the following formula:

FV= PV*(1+i)^n

First deposit= 16,500*(1.045^4)= 19,676.56

Second deposit= 12,000*(1.045^3)= 13,694

Third deposit= 20,000*(1.045^2)= 21,840.5

Total= $55,211.06