COMMERCE 2FA3 Chapter 6: Finance - Chapter 6 Cash Flows
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6. 1 future and present values of multiple cash flows. Suppose you deposit today and then another year into an account paying 8%. How much will you have in two years? (method 1) At the end of the second year 208 x 1. 08 = 224. 64. Thus, the total future value will be . 64. You can also do it another way (method 2) You can use a time line to help you see what it is happening. The most important thing is to write them down where they actually occur. Below there are two ways to calculate future values for multiple cash flows: compound the accumulated balance forward one year at a time or, calculate the future value of each cash flow first and then add them up. We often need to determine the present value of a series of future cash flows. Example: suppose you need in one year and more in two years.