what is the total future value six years from now of $50 received in one year,...

what is the total future value six years from now of $50 received in one year, 200received in two years and $800 received in 6 years if the discount rate is 8%

Solutions

Expert Solution

The question is solved first by computing the present value.

Net present value is solved using a financial calculator. The steps to solve on the financial calculator:

Press the CF button.
CF0= $0.
Cash flow for all the years should be entered.
Press Enter and down arrow after inputting each cash flow.
After entering the last cash flow, press the NPV button and enter the discount rate of 8%.
Press the down arrow and CPT buttons to get the net present value.

Net Present value of cash flows at 8% the discount is $721.90.

Enter the below in a financial calculator to calculate the future value:

PV= -721.90

N= 6

I/Y= 8

Press the CPT key and FV to compute the future value.

The value obtained is 1,145.56.

Therefore, the total future value six years now is $1,145.56.

jeff jeffy answered 2 years ago

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