Question

"Joey is planning to invest his savings in a fixed income fund. He manages to deposit $700 at the end of the first year, $500 at the end of the second year, $300 at the end of the third year, and $600 at the end of the fourth year. If the fund earns 6 percent interest each year, the terminal (future) value of this uneven cash flow stream at the end of Year 4 is _____."

Answer 1

Terminal Value 2,313.51

Step-by-step explanation:

Year Cash Flows (in $) FV Factor Formula Terminal Value( in $)

1 700 1.1910 (1+6%)^{4-1} 833.71

2 500 1.1236 (1+6%)^{4-2} 561.80

3 300 1.0600 (1+6%)^{4-3} 318.00

4 600 1.0000 (1+6%)^{4-4} 600.0

Terminal Value (833.71 + 561.80+318.00+600.00) = 2,313.51