Future Value of Multiple Cash Flows

Future value of multiple cash flows can be calculated with the help of a simple problem. Usually people plan to save some amount each year for the purpose of meeting future needs and requirements. Suppose, in the first year a person save and invest 2000 in a bank and other 3000 after one year. Interest rate is 7%, how much will he get after the second year.

 

Solution:

 

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If the person want to have more saving lets say for three years and in the third year he wants to investment 1500, Then the first two deposits have an extra year for interest to compound.

 

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