Question

In: Finance

You are given an investment to analyze. The cash flows from this investment are End of...

You are given an investment to analyze. The cash flows from this investment are End of year $1,889 $4,423 $631 $2,091 $1,431 What is the future value of this investment at the end of year five if 13.93 percent per year is the appropriate interest (discount) rate?

Solutions

Expert Solution

Statement showing future value in case of annual payments
Year Cash flow Future Value at end of Year 5 Working Notes
                                                                                 1.00           1,889.00                                                3,182.62 1889*(1.1393)^4
                                                                                 2.00           4,423.00                                                6,540.81 4423*(1.1393)^3
                                                                                 3.00               631.00                                                    819.04 631*(1.1393)^2
                                                                                 4.00           2,091.00                                                2,382.28 2091*(1.1393)^1
                                                                                 5.00           1,431.00                                                1,431.00 1431*(1.1393)^0
        10,465.00                                              14,355.74
Future value is $14355.74

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