Glenmore Industrial receives a $875,000 equipment-upgrade settlement from a supplier dispute in Q1 2024. Rather than deploy it immediately, the company's CFO invests it in a high-yield corporate bond fund earning 6.75% annually, compounded semi-annually, for 8.5 years until the bond matures and funds are needed for a major plant renovation.
Correct Answers
future_value
$1,538,409.44
Step-by-Step Solution
Future Value Formula: FV = PV × (1 + r)^n Present Value (PV): $875,000.00 Rate per period (r): 3.3750% Periods (n): 17 FV = $875,000.00 × (1 + 3.3750%)^17 FV = $875,000.00 × 1.758182 FV = $1,538,409.44