Question

Lucy Anders wishes to save $700 at the end of each year for the first four...

Lucy Anders wishes to save $700 at the end of each year for the first four years. At the

end of each of the fifth ,sixth, and seventh years, she wishes to save $625. Find the future

value of this cash flow at the end of the seventh year if the interest rate is 4.7% compounded

annually.

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Answer #1

Solution

Future value of a cashflow=Cashflow*(1+r)^n

where

r-intrest rate=4.7%

n-number of periods of compounding

Calculation of future value for cashflows given below ,using above formula

Excel formula

Thus the Future value of cashflow=$5411.896

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