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Identify the steps involved in computing the future value when you have multiple cash flows. (please...

Identify the steps involved in computing the future value when you have multiple cash flows. (please give a new answer)

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Answer #1

Future Value refers to the Value of the cash flows at a given point of time in the Futue.

Step 1: When we have multiple cash flows available, to compute the future value, we must first identify the time period at which it is occuring and the time period in future for which we want to calculate the future value.

Step 2: If the Cash flows are consistent and occuring periodically, then we can apply the Future value annuity formulae and if the cash flows are not consistent then we have to calculate the future value of each flows.

Step 3: After calculating the future value of each flows then the sum of all these future values will be the future value.

Future Value Formulae : PV ( 1 +R)^ N

Where PV is Present Value, R is rate and N is total periods.

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