Question

You receive $1,200 today, $2,200 in one year, and $3,300 in two years. If you deposit these cash flows in an account earning 12%, how much money is in the account three years from now?

Answer 1

The amount of money that is in the account three years from now is $8,142.

Step-by-step explanation:

Future Value of $1200

FV = PV (1 + r )n

= 1200*(1 + 12%)^3

= $1685.91

Future Value of $2200

FV = PV (1 + r )n

= 2200*(1 + 12%)^2

= $2759.68

Future Value of $3300

FV = PV (1 + r )n

= 3300*(1 + 12%)^1

= $3696.00

Total Future Value = $1685.91 + $2759.68 + $3696.00

= $8142

Therefore, The amount of money that is in the account three years from now is $8,142.