Consider the following cash flows: Year Cash Flow 2 $ 22,400 3 40,400 5 58,400 Assume an interest rate of 9.2 percent per year. a. If today is Year 0, what is the future value of the cash flows five years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.) b. If today is Year 0, what is the future value of the cash flows ten years from now?

Question

Mackenzie Vaughan

Business

9 November, 03:13

Consider the following cash flows: Year Cash Flow 2 $ 22,400 3 40,400 5 58,400 Assume an interest rate of 9.2 percent per year. a. If today is Year 0, what is the future value of the cash flows five years from now? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.) b. If today is Year 0, what is the future value of the cash flows ten years from now?

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Answers (1)

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Cortez Wilson · Answer 1

Instructions are listed below

Explanation:

Giving the following information:

Cash Flow:

Year 2 $ 22,400

Year 3 $40,400

Year 5 $58,400

i = 0.092

A) n = 5

FV = PV * (1+i) ^n

FV = 22400 * (1.092^3) = $29,168.62

FV = 40400 * (1.092^2) = $48,175.55

FV = 58,400

Total = $135,744.17

B) n = 10

FV = $210,782.41