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7 July, 08:22

Wells, Inc., has identified an investment project with the following cash flows. Year Cash Flow 1 $ 1,000 2 1,230 3 1,450 4 2,190 a. If the discount rate is 9 percent, what is the future value of these cash flows in Year 4

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  1. 7 July, 08:51
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    Total = $7,114.32

    Explanation:

    Giving the following information:

    Cash Flow:

    1 $ 1,000

    2 1,230

    3 1,450

    4 2,190

    Discount rate = 9%

    To calculate the future value, we need to use the following formula on each cash flow:

    FV = PV * (1+i) ^n

    Cf1 = 1,000*1.09^4 = 1,411.58

    Cf2 = 1,230*1.09^3 = 1,592.89

    Cf3 = 1,450*1.09^2 = 1,722.75

    Cf4 = 2,190*1.09 = 2,387.1

    Total = $7,114.32
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