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You plan on saving for a large home improvement project using the following cash flows: $50,000 today, $25,000 next year, and $10,000 the following year. If your savings account earns a 10% return per year, how much money will be available for the project after collecting the last payment?

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Answer:

Total= $98,000

Explanation:

Giving the following information:

You plan on saving for a large home improvement project using the following cash flows: $50,000 today, $25,000 next year, and $10,000 the following year. The account earns a 10% return per year.

We need to use the following formula:

FV= PV*(1+i)^n

FV= 50,000*1.10^2= 60,500

FV= 25,000*1.1= 27,500

FV= 10,000

Total= $98,000

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