Question

Future Value of uneven cash flows In 2 years you plan to go on a Horn of Africa Pirate Adventure. Starting next year you wil place $2.036 into a savings occount In the second year you will place $2,253 into the savings account. The savings account will earns an interest rate of 5%. How much money will you have for you vacation?

Answer 1

The future value of the uneven cash flows for the Horn of Africa Pirate Adventure is $4,506.49.

Step-by-step explanation:

To find the future value of uneven cash flows, we can use the formula for compound interest. In the first year, you will place $2,036 into a savings account, and in the second year, you will place $2,253. The interest rate is 5%. We can calculate the future value by multiplying each cash flow by its respective interest factor and then summing the results:

Year 1: $2,036 x (1 + 0.05)^2 = $2,140.84

Year 2: $2,253 x (1 + 0.05)^1 = $2,365.65

Total future value for your vacation: $2,140.84 + $2,365.65 = $4,506.49