Question

A construction management company is examining its cash flow requirements for the next few years. The company expects to replace software and in-field computing equipment at various times. Specifically, the company expects to spend $6,000 1 year from now, $10,000 3 years from now, and $17,000 each year in years 6 through 10. What is the future worth in year 10 of the planned expenditures, at an interest rate of 14% per year?

Answer 1

Rate of Interest = 14% = 0.14

Future worth is calculated as: [Present value Invested * (1 + Rate of Interest)Year for which amount is Invested]

Year	Year for which amount is Invested	Cash Flow	Future worth
1	9	6,000.00	15,348.22
2	8
3	7
4	6	10,000.00	18,704.15
5	5
6	4	17,000.00	25,807.20
7	3	17,000.00	23,249.73
8	2	17,000.00	20,945.70
9	1	17,000.00	18,870.00
10	0	17,000.00	17,000.00
Total	139,924.99

Futute worth is $139,924.99 or $139,925