Question

Find the future value at the end of year 3 of the following stream of cash flows received at the end of each​ year, assuming the firm can earn 17 percent on its investments.

Year Amount

1- 3,000

2 - 6,000

3- 9,000

Answer 1

Stream of Cash flows at the end of each year are:-

Year 1 end(CF1) = $3000

Year 2 end(CF2) = $6000

Year 3 end(CF3) = $9000

Calculating the of Stream of cash flows:-

Where, r = Interest rate = 17%

n= no of periods = 3 years

Future Value = $4106.7 + $7020 + $9000

Future Value = $20,126.70

So, the future value at the end of year 3 is $20,126.70

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