"shekhar invests $1,820 in a mutual fund at the end of each of the next six years. if his opportunity cost rate is 8 percent compounded annually, how much will his investment be worth after the last annuity payment is made? "

The investment will have a value of $2875.60 after 6 years.

Explanation:

The formula to determine the final value of this investment at the end of this period is:

Future Value= Present Value*(1+r)^n

Where:

Present Value= Current value is capital today. In this case $1,820

Future Value= It is the value that is generated as a result of a compound nominal rate applied to a certain number of periods in which said rate is applied plus the present value.  

r= The interest rate at which the debt is generated is determined in percentage and its duration is annual. In this case 8%

n=The periods that the investment or debt will last. In this case there are 6 periods because the investment is annual.

FV= 1820 *(1+0.08)^6

FV=1820*1.58

FV= 2875.60

the investment was $14,174.196

explanation:

a lump sum means that the father of the example made one deposit and leave it be.

we need to know the value of a capital that generated at 4.05% per year during 28 years the sum of $48,613.24

now clearing the formula to solve for capital we got:

and we reach the answer investment = $14,174.20