(Future Value Table Required)An Accounting Student in Her First Year

question 30

Essay

(Future Value Table Required)An accounting student in her first year of college who is working on a 4-year degree receives from her parents $200 in her first year.As an incentive to encourage her to graduate,they promise that in the second year she will receive double the amount of the first year,and in the third year she will receive double the amount of the second year.In her fourth year,she will receive $1,000.If she invests her yearly gifts at a rate of 4% as she receives them,compare the value of the investment after five years with the value of the gift (present value).What is the investment loss if the gift is not invested?

---

Definitions:

Fraudulent

Fraudulent activities involve deceit or trickery, intentionally carried out for personal gain or to cause financial or personal harm to others.

Demand Instrument

A financial document that requires payment of the amount specified on it upon demand by the holder.

Overdue

A state of being late or delayed in completing a payment, task, or fulfilling an obligation beyond the agreed timeframe.

Demand

The desire of purchasers to buy goods or services at a given price, which, combined with supply, determines market prices.