Question

Consider the following cash flow:

Year	Cash Flow
2		$	21,000
3			39,000
5			57,000

Assume an interest rate of 7.8 percent per year.

Requirement 1:

If today is Year 0, what is the future value of the cash flows five years from now? (Do not include the dollar signs ($). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Future value

$

Requirement 2:

If today is Year 0, what is the future value of the cash flows ten years from now? (Do not include the dollar signs ($). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Future value

$

Answer 1

Solution.>

I have solved this question in Excel. The formula used are written along with the values. If you still have any doubt, kindly ask in the comment section.

Part a> The future value of cash flows 5 years from now will be $128,628.53

Part b> The future value of cash flows 10 years from now will be $187,254.01

Note: Give it a thumbs up if it helps! Thanks in advance!