Question

Havana, Inc., has identified an investment project with the following cash flows. If the discount rate is 4 percent, what is the future value of these cash flows in Year 4? (Hint: Be careful with the number of periods.) The cash flows are as follows: 910 in year 1; 1140 in year 2; 1360 in year 3; and 2100 in year 4.

Answer 1

Year	cash flow	calculations	Future value
1	$             910	=$910*1.04^3	$   1,023.63
2	$         1,140	=1140*1.04^2	$   1,233.02
3	$         1,360	=1360*1.04^1	$   1,414.40
4	$         2,100	=$2100*1.04^0	$   2,100.00
Future value			$   5,771.05