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An accounting student in her first year of college who is working on a 4-year...

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Accounting

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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? 1 Future Value of $1 Periods 3% 1 1.030 2 1.061 3 1.093 4 1.126 1.159 4 % 1.040 1.082 1.125 1.170 1.217 Future Value of Annuity of $1 Periods 3% 4% 1 1.000 1.000 2 2.030 2.040 3 3.091 3.122 4.184 4.246 5 5.309 5.416

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