Question

An investment will pay $100 at the end of each of the next 3 years, $200 at the end of Year 4, $300 at the end of Year 5, and $500 at the end of Year 6. If other investments of equal risk earn 6% annually, what its future value? Do not round intermediate calculations. Round your answers to the nearest cent.

Answer 1

Future value = Present value * future value factor (r%,n)

Future value factor = (1+r)ⁿ

r - rate of interestr = 6% or 0.06

n- No. of balance periods have to compound

Year	Cash flow	Balance period	Future value factor @ 6 %	Future value
1	100	5	1.3382	133.82
2	100	4	1.2625	126.25
3	100	3	1.1910	119.10
4	200	2	1.1236	224.72
5	300	1	1.0600	318.00
6	500	0	1.0000	500.00
Future value			1421.89

Future Value = $ 1421.89