Problem 2 [Calculate FV]:

Let t denote years. Consider the following stream of payments:

t = Payment

$200

$400

a.(2pts) Calculate the future value at t = 3 of the payment made at t = 1 given an interest rate is 1% (r = .01).

(2pts) Calculate the future value at t = 3 of the payment made at t = 2 given an interest rate is 1% (r = .01).

(2pts) As with the present value of a set of payments, the future value of a set of payments is simply the sum of the future values of the individual payments. Given your answers to parts a and b above, what is the future value at t = 3 of the stream of payments listed in the table above?