Question

# What is the total future value in 40 years of the following cash flows: \$10,000 invested...

What is the total future value in 40 years of the following cash flows: \$10,000 invested today, \$25,000 invested in 6 years and 7 months, and \$50,000 invested in 15 and 2 months? Use a discount rate .9% monthly.

Total months in 40 years = 40 years * 12 = 480 months

Amount invested today = \$10,000

Months on investment = 480 months

Monthly interest rate = 0.9% = 0.009

Future value of \$10,000 = \$10,000*1.009480 = \$737,496.12

Amount invested in 6 years and 7 months i.e.79 months = \$25,000

Period of investment = 480 months – 79 months = 401 months

Future value of \$25,000 = \$25,000 * 1.009401 = \$908,442.97

Amount invested in 15 years and 2 months i.e. 182 months = \$50,000

Period of investment = 480 months – 182 months = 298 months

Future value of \$50,000 = \$50,000*1.009298 = \$722,000.57

Total future value in 40 years = \$737,496.12 + \$908,442.97 + \$722,000.57 = \$2,367,939.76

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