Question

An investment will pay $50 at the end of each of the next 3 years, $250 at the end of Year 4, $350 at the end of Year 5, and $500 at the end of Year 6. If other investments of equal risk earn 4% annually, what is its present value and future value?

Answer 1

Present Value of Cashflow
Year	casflow	PVF @4%	PV
1	50	0.9615	48.075
2	50	0.9245	46.225
3	50	0.889	44.45
4	250	0.8548	213.7
5	350	0.8219	287.66
6	500	0.7903	395.15
Total present value of cashflow	1035.26

Future Value of Cashflow
Year	casflow	FVF @4%	FV
1	50	1.2167	60.835
2	50	1.1699	58.495
3	50	1.1249	56.245
4	250	1.0816	270.4
5	350	1.04	364
6	500	1	500
Total future value of cashflow	1309.97

Present value =1035.26

Future value = 1309.97