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28 January, 03:35

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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  1. 28 January, 03:59
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    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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