Question
In: Finance
What is the future value of the following set of cash flows, discounted at 10% per...
What is the future value of the following set of cash flows, discounted at 10% per year? Year 0 1 2 3 4 5 CF 0 50 40 30 20 10
Solutions
Expert Solution
| Future value of annual cash flows are calculated as follows: | |||||
| Year | Cash flows | Future Value of 1 | Future Value of cash flows | ||
| a | b | c=1.10^(5-a) | d=b*c | ||
| 0 | 0 | 1.6105 | 0 | ||
| 1 | 50 | 1.4641 | 73.21 | ||
| 2 | 40 | 1.3310 | 53.24 | ||
| 3 | 30 | 1.2100 | 36.30 | ||
| 4 | 20 | 1.1000 | 22.00 | ||
| 5 | 10 | 1.0000 | 10.00 | ||
| Total | 194.75 | ||||
| Thus, | |||||
| Future Value of cash flows will be | 194.75 | ||||
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