Savingforretirement savingforretirement

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Unformatted text preview: Flows – FV Multiple Cash Flows – FV Example 1 Suppose you invest $500 in a mutual fund today and $600 in one year. If the fund pays 9% annually, how much will you have in two years? Year 0 CF: 2 N; ­500 PV; 9 I/Y; CPT FV = 594.05 Year 1 CF: 1 N; ­600 PV; 9 I/Y; CPT FV = 654.00 Total FV = 594.05 + 654.00 = 1248.05 Multiple Cash Flows – Example 1 Multiple Cash Flows – Example 1 Continued How much will you have in 5 years if you make no further deposits? First way: Year 0 CF: 5 N; ­500 PV; 9 I/Y; CPT FV = 769.31 Year 1 CF: 4 N; ­600 PV; 9 I/Y; CPT FV = 846.95 Total FV = 769.31 + 846.95 = 1616.26 Second way – use value at year 2: 3 N; ­1248.05 PV; 9 I/Y; CPT FV = 1616.26 Multiple Uneven Cash Flows: Multiple Uneven Cash Flows: Using the Calculator Another way to use the financial calculator for uneven cash flows is to use the cash flow keys Texas Instruments BA­II Plus Press CF and enter the cash flows beginning with year 0. You have to press the “Enter” key for each cash flow Use the down arrow key to mov...
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This document was uploaded on 01/14/2014.

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