Question

give n the following cash inflow at the end of each
year, what is the future value of this cash flow at 6%, 11% and 14%
interest rates at the end of year 7?

year
1.
$13,000

year
2.
$18,000

year
3.
$31,000

year 4 through 6. $0

year
7.
$140,000

Answer #1

Future value of the cash flows @6% = 13000 * ( 1.06)^6 + 18000* (1.06)^5 + 31000 *(1.06)^4 + 0 + 0 +0 + 140000

= 13000* 418519 + 18000* 338226 + 31000* 1.262477 + 0 + 0 + 0 + 140000

=18440.75 + 24088.06 + 39136.79 + 0 + 0 + 0 + 140000

= $221,665.59

Future value of the cash flows @11% = 13000 * ( 1.11)^6 + 18000* (1.11)^5 + 31000 *(1.11)^4 + 0 + 0 + 0 + 140000

= 13000 * 1.870415 + 18000* 1.685058 + 31000*1.518070 + 0 + 0 + 0 +140000

= 24315.39 + 30331..05 + 47060.18 + 0 + 0 + 0 + 140000

=$241,706.62

Future value of the cash flows @14% = 13000 * ( 1.14)^6 + 18000* (1.14)^5 + 31000 *(1.14)^4 + 0 + 0 + 0 + 140000

= 13000 * 2.194973 + 18000* ( 1.925415) + 3100* 1.518070 + 0 + 0 + 0 + 140000

= 28534.64 + 34657.46 + 47060.18

= $250,252.29

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