This problem involves calculating the future value of an annuity, where the company deposits $6000 at the end of each year for 10 years at an interest rate of 8% per annum.

The formula for the future value of an ordinary annuity (where deposits are made at the end of each period) is:

$FV = P \times \frac{(1 + r)^n - 1}{r}$

where:

• $P$ = annual deposit = $6000
• $r$ = interest rate per period = 0.08
• $n$ = number of periods = 10

Calculation

1. Substitute the values: $FV = 6000 \times \frac{(1 + 0.08)^{10} - 1}{0.08}$

2. Calculate $(1 + 0.08)^{10}$: $(1.08)^{10} \approx 2.1589$

3. Plug this back into the formula: $FV = 6000 \times \frac{2.1589 - 1}{0.08}$

4. Simplify: $FV = 6000 \times \frac{1.1589}{0.08}$

5. Calculate further: $FV = 6000 \times 14.48625 \approx 86919$

Answer

The closest answer is c. $86919.

Would you like more details on each step, or have any questions?

Here are 5 related questions to expand your understanding:

1. How would the future value change if deposits were made at the beginning of each year?
2. What is the effect of increasing the interest rate on the future value?
3. How would a shorter investment period (e.g., 5 years) impact the final amount?
4. How would increasing the annual deposit affect the future value?
5. What formula would you use if this were a continuous annuity?

Tip: Always check if deposits are made at the beginning or end of the period; it changes the calculation formula!