Leberland Corporation Deposits $125,000 Every Year in a Savings Account

question 53

Multiple Choice

Leberland Corporation deposits $125,000 every year in a savings account (beginning at the end of the current year) for the next six years so that it can purchase a new piece of machinery at the end of six years. The interest rate is 6%. How much money will Leberland Corporation have at the end of six years? Use the future value of an ordinary annuity factor table shown below to derive your answer.
Excerpt from future value of an ordinary annuity factor table
$$\begin{array} { | c | c | c | c | c | } \hline \text { Periods } & 3 \% & 4 \% & 5 \% & 6 \% \\\hline 1 & 1.00000 & 1.00000 & 1.00000 & 1.00000 \\\hline 2 & 2.03000 & 2.04000 & 2.05000 & 2.06000 \\\hline 3 & 3.09090 & 3.12160 & 3.15250 & 3.18360 \\\hline 4 & 4.18363 & 4.24646 & 4.31013 & 4.37462 \\\hline 5 & 5.30914 & 5.41632 & 5.52563 & 5.63709 \\\hline 6 & 6.46841 & 6.63298 & 6.80191 & 6.97532 \\\hline 7 & 7.66246 & 7.89829 & 8.14201 & 8.39384 \\\hline 8 & 8.89234 & 9.21423 & 9.54911 & 9.89747 \\\hline 9 & 10.15911 & 10.58280 & 11.02656 & 11.49132 \\\hline 10 & 11.46338 & 12.00611 & 12.57789 & 13.18079 \\\hline\end{array}$$

• A) $871,915
• B) $397,950
• C) $435,958
• D) $198,975

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