Question

1. What is the future value on December 31, 2022, of 6 annual cash flows of $50,000 with the first cash flow being made on December 31, 2016, and interest at 9% compounded annually? Round your answer to two decimal places.

3.What is the present value on January 1, 2016, of 7 equal future annual receipts of $30,000 if the first receipt is received on January 1, 2017, and the interest rate is 10% compounded annually? Round your answer to two decimal places.

4.What is the future value on December 31, 2021, of 6 annual cash flows of $50,000 with the first cash flow being made on December 31, 2016, and interest at 9% compounded annually? Round your answer to two decimal places.

Answer 1

1. The future value calculation is as under:

Cash flow date	Amount	Number of years till Dec31,22	FV factor	Future Value
Dec 31, 16	50,000	6	1.6771	83,855.01
Dec 31, 17	50,000	5	1.5386	76,931.20
Dec 31, 18	50,000	4	1.4116	70,579.08
Dec 31, 19	50,000	3	1.2950	64,751.45
Dec 31, 20	50,000	2	1.1881	59,405.00
Dec 31, 21	50,000	1	1.0900	54,500.00
Total FV amount				4,10,021.73

2. The PV calculation is as under:

Cash flow date	Amount	Number of years from Jan1, 16	PV Factor	Present Value
Jan1, 17	30,000	1	0.9091	27,272.73
Jan1, 18	30,000	2	0.8264	24,793.39
Jan1, 19	30,000	3	0.7513	22,539.44
Jan1, 20	30,000	4	0.6830	20,490.40
Jan1, 21	30,000	5	0.6209	18,627.64
Jan1, 22	30,000	6	0.5645	16,934.22
Jan1, 23	30,000	7	0.5132	15,394.74
Total FV amount				1,46,052.56

4. The FV calculation is as under:

Cash flow date	Amount	Number of years till Dec31,21	FV factor	Future Value
Dec 31, 16	50,000	5	1.5386	76,931.20
Dec 31, 17	50,000	4	1.4116	70,579.08
Dec 31, 18	50,000	3	1.2950	64,751.45
Dec 31, 19	50,000	2	1.1881	59,405.00
Dec 31, 20	50,000	1	1.0900	54,500.00
Dec 31, 21	50,000	0	1.0000	50,000.00
Total FV amount				3,76,166.73

The formula for calculating FV factor is = (1+r)^n where r is the rate of interest per annum and n is the number of years.

The formula for calculating PV factor is = 1/(1+r)^n where r is the rate of interest per annum and n is the number of years.