01.Core Concepts

• Betsy will deposit in her account $100 this year, $200 next year, and $300 the third year. All deposits are made on December 31, and her account pays 7%. • End of • Year 1: $100 • Year 2: $100(1.07) + $200 = $307 • Year 3: $307(1.07) + $300 = $628 • Calculator: CF0 = 0, CF1 = –100, CF2 = –200, CF3 = –300, I/YR = 7 • Result: NPV = –513 • (END Mode) PV = –513, PMT = 0, N = 3, I/YR = 7 • Result: FV = $628