Question

$100 is received at the beginning of year 1, $200 is received at the beginning of year 2, and $300 is received at the beginning of year 3. If these cash flows are deposited at 12 percent, their combined future value at the end of year 3 is ________.

Answer 1

Use the CF function in the calculator in the BGN mode as it is an annuity due problem.

Input CF0 = $100.

CF1 = $200

CF2 = $300

And then input I/Y or Rate = 12%

And then compute for NFV to get $649.44

The Future value is going to be $100(1.12)^3+$200(1.12)^2+$300(1.12) = $727.37