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In: Finance

Different cash flow.  Given the following cash inflow at the end of each​ year, what is...

Different cash flow.  Given the following cash inflow at the end of each​ year, what is the future value of this cash flow at 6%​, 11%​, and 18​% interest rates at the end of year​ 7?

Year​ 1:

​$16,000

Year​ 2:

​$19,000

Year​ 3:

​$30,000

Years 4 through​ 6:

​$0

Year​ 7:

​$150,000

Solutions

Expert Solution

Interest Rate 6%
Year Cash Flow Compounding Factor
[(1+Interest Rate)^(7-Year)]		 FV of Cash Flow
[Cash Flow*Compounding Factor]
1 16000 1.418519112 22696.3058
2 19000 1.338225578 25426.28597
3 30000 1.26247696 37874.3088
7 150000 1 150000
Net Future Value
[Sum of FVs]		 235996.9006 = $235996.9
Interest Rate 11%
Year Cash Flow Compounding Factor
[(1+Interest Rate)^(7-Year)]		 FV of Cash Flow
[Cash Flow*Compounding Factor]
1 16000 1.870414552 29926.63283
2 19000 1.685058155 32016.10495
3 30000 1.51807041 45542.1123
7 150000 1 150000
Net Future Value
[Sum of FVs]		 257484.8501 = $257484.85
Interest Rate 18%
Year Cash Flow Compounding Factor
[(1+Interest Rate)^(7-Year)]		 FV of Cash Flow
[Cash Flow*Compounding Factor]
1 16000 2.699554153 43192.86645
2 19000 2.287757757 43467.39738
3 30000 1.93877776 58163.3328
7 150000 1 150000
Net Future Value
[Sum of FVs]		 294823.5966 = $294823.6

jeff jeffy answered 2 years ago
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