If the discount rate is 6 percent, what is the future value of these cash flows in Year 4?What is the future value at an interest rate of 14 percent?

Question

4.02K viewsOctober 12, 2016

0

Darshita 6.14K October 12, 2016 0 Comments

Havana, Inc., has identified an investment project with the following cash flows.

Year	Cash Flow
1		$	940
2			1,170
3			1,390
4			2,130

Requirement 1:

If the discount rate is 6 percent, what is the future value of these cash flows in Year 4? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations.Round your answer to 2 decimal places (e.g., 32.16).)

Future value

$

Requirement 2:

What is the future value at an interest rate of 14 percent? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Future value

$

Requirement 3:

What is the future value at an interest rate of 21 percent? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Future value

1 Answer

score 0 · Answer 1 · 2016-10-12T08:36:42+00:00

Requirement :

If the discount rate is 6 percent, what is the future value of these cash flows in Year 4? = $ 6037.57

FV@6% = $940(1.06)3+ $1,170(1.06)2+ $1390(1.06) + $2,130 = $ 6037.57

year	Cash Flow in $	FV Factro @6%
1	940	1.191016	1119.555
2	1170	1.1236	1314.612
3	1390	1.06	1473.4
4	2130	1	2130
			6037.567

Requirement :

If the discount rate is 6 percent, what is the future value of these cash flows in Year 4? = $ 6627.74

FV@14% = $940(1.14)3+ $1,170(1.14)2+ $1390(1.14) + $2,130 = $ 6627.74

year	Cash Flow in $	FV Factro @6%	FV
1	940	1.4815	1392.61
2	1170	1.2996	1520.532
3	1390	1.14	1584.6
4	2130	1	2130
			6627.742

Requirement :3

What is the future value at an interest rate of 21 percent= $ 7190.16

FV@21% = $940(1.21)3+ $1,170(1.21)2+ $1390(1.21) + $2,130 = $ 7190.16

year	Cash Flow in $	FV Factro @6%	FV
1	940	1.771561	1665.267
2	1170	1.4641	1712.997
3	1390	1.21	1681.9
4	2130	1	2130
			7190.164

1 Answer

Contact us today