In Chapter 4, complete the following exercises at the end of section 4.3:
1. In your financial planning journal, identify and record at least two recent cash flows, e.g. income through employment, a student loan disbursement received, a credit card payment, an investment made). Calculate the future value of these cash flows over two years. If you put the income received into a savings account, what is the future value of that money in two years when you factor in the interest rate of that savings account? What is the interest rate of your student loan and what will that student loan cost you over two years when you factor in interest payments? If you made a recent credit card payment, what would the future value of that credit card payment be in two years if you put it into savings or invested it?
2. How can you determine if a lump-sum payment or an annuity will have greater value for you?