Today you have decided to elaborate a plan for your personal finances. You expec
ID: 1148675 • Letter: T
Question
Today you have decided to elaborate a plan for your personal finances. You expect the following end of the year cash flows: an expense of 21626 dollars two years from now, a receivable 27819 of and an expense of 25029 dollars four years from now, and an expense of 19862 dollars six years from now. How much money do you need to deposit today in order to honor these future financial obligations if your savings account yields 10% per year? Only a single deposit today is allowed; no other option available. (note: round your answer to the nearest cent, and do not include spaces, currency signs, plus or minus signs, or commas)
Explanation / Answer
PW = 21626(P/F, 10%, 2) + (25029 - 27819)(P/F, 10%, 4) + 19862(P/F, 10%, 6)
= 21626(0.8264) - 2790(0.6209) + 19862(0.5645)
= 17871.73 - 1732.31 + 11212.1
= 27352
You need to deposit 27352 today in order to honor these future financial obligations.