Future/Compounded Value of Series of Payments
So far we have considered only the future value of a single payment made at time zero. In many instances. we may be interested in the future value of a series of payments made at different time periods. For simplicity, we assume that the compounding time period is one year and payment is made at the end of each year. Suppose. Mr.X deposits each year Rs 500. Rs 1.000, Rs 1.500, Rs 2,000 and Rs 2,500 in his saving bank account for 5 years. The interest rate is 5 per cent. He wishes to find the future value of his deposit at the end of the 5th year. Table 2.5 presents the calculations required to determine the sum of money he will have.