Question
In: Finance
Based on the following cash flows, find the future value in year 9. Assume deposits were...
- Based on the following cash flows, find the future value in year 9. Assume deposits were made at the end of the year and the rate of return is 15%.
|
Year |
1 |
4 |
9 |
|
Cash Flows |
9,000 |
4,000 |
1,000 |
Solutions
Expert Solution
| Year | Cash flow | Future value of 1 at the end of year 9 | Future value of cash flow in year 9 | ||||
| a | b | c=1.15^(9-a) | d=b*c | ||||
| 1 | 9000 | 3.059 | 27,531.21 | ||||
| 4 | 4000 | 2.011 | 8,045.43 | ||||
| 9 | 1000 | 1.000 | 1,000.00 | ||||
| Total | 36,576.63 | ||||||
| So, future value of cash flow will be | 36,576.63 | ||||||
| Working: | |||||||
| c=1.15^(9-a) means: | |||||||
| For year : | |||||||
| 1 | = | 1.15^(9-1) | = | 3.059 | |||
| 4 | = | 1.15^(9-4) | = | 2.011 | |||
| 9 | = | 1.15^(9-5) | = | 1.749 | |||
jeff jeffy answered 9 months agoRelated Solutions
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|
Cash
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