Multiple Cash Flows - FV

# Multiple Cash Flows - FV - Multiple Cash Flows FV Lets...

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Multiple Cash Flows - FV Let’s solve the first one…you deposit \$1,000 per year into your savings account for four years, starting now, to save for a house. How much money will you have at the end of four years? 1

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Multiple Cash Flows - FV 2 r = .08 0 1 2 3 4 \$1,000 \$1,000 \$1,000 \$1,000 Why can’t we just add the four amounts and grow them at 8% like we did before? We already know that we can calculate equivalent values for single cash flows in ??
Multiple Cash Flows - FV 3 r = .08 \$1,000 \$1,000 \$1,000 \$1,259.71 \$1,080.00 \$1,166.40 \$4,866.60 (rounding) 0 1 2 3 4 \$1,000 \$1,360.49 \$1,000(1.08)4 \$1,000(1.08)3 \$1,000(1.08)2 \$1,000(1.08)1 ?? FV t = PV(1 + r ) t Calculate the FV of each cash flow and add them.

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Let’s do it again but, this time, instead of making the first deposit now , you wait one year to make your initial deposit and then save annually for three more years thereafter. How much money will you have at the end of four years? Redraw the time line and calculate the future
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Multiple Cash Flows - FV - Multiple Cash Flows FV Lets...

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