Question

Compute the future value of a $140 cash flow for the following combinations of rates and times. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

a. r = 8%; t = 10 years

b. r = 8%; t = 20 years

c. r = 4%; t = 10 years

d. r = 4%; t = 20 years

Answer 1

(a) Initial Value = $ 140, Interest Rate = 8 % and Time = 10 years

Future Value = 140 x (1.08)^(10) = $ 302.25 approximately.

(b)

Initial Value = $ 140, Interest Rate = 8 % and Time = 20 years

Future Value = 140 x (1.08)^(20) = $ 652.53 approximately.

(c)

Initial Value = $ 140, Interest Rate = 4 % and Time = 10 years

Future Value = 140 x (1.04)^(10) = $ 207.23 approximately.

(d)

Initial Value = $ 140, Interest Rate = 4 % and Time = 20 years

Future Value = 140 x (1.04)^(20) = $ 306.76 approximately.