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Fishly, Inc., has identified an investment project with the following cash flows. If the discount rate...

Fishly, Inc., has identified an investment project with the following cash flows. If the discount rate is 9 percent for the first 2 years and 7% for the years after, beginning with year 3, what is the future value of these cash flows in Year 5? What is the future value of the cash flows in year 10? What is the present value of the cash flows?

Year

Cash Flow

1

$1,075

2

$1,235

3

$1,510

4

$1,965

5

0

6

0

7

$10,000

Solutions

Expert Solution

What is the future value of these cash flows in Year 5?

=1075*1.09*1.07^5+1235*1.07^5+1510*1.07^4+1965*1.07^3+10000
=17762.1028

What is the future value of the cash flows in year 10?
=(1075*1.09*1.07^5+1235*1.07^5+1510*1.07^4+1965*1.07^3+10000)*1.07^3
=21759.3398

What is the present value of the cash flows?
=(1075*1.09*1.07^5+1235*1.07^5+1510*1.07^4+1965*1.07^3+10000)/(1.07^5*1.09^2)
=10659.1481

jeff jeffy answered 2 years ago
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