Question

Assume that 17.00 % is the appropriate rate for the following cash flow stream.

Year	Cash Flow ($)
1	3,000
2-11	4,000
12-25	6,000
26-40	10,000

1. What is the Present Value of the cash flows?

2. What is the Future Value of the cash flows?

Round your answer to the nearest dollar and do NOT enter a dollar sign.

Answer 1

Question 1 = Present Value today = 25121

Question 2 = Future Value after 40 years =13,411,254

Question 1 Calculation of Present Value

Year	Cash Flow	Present Value Factor @17%	Present Value
1	3000	0.855	2,564.10
2	4000	0.731	2,922.05
3	4000	0.624	2,497.48
4	4000	0.534	2,134.60
5	4000	0.456	1,824.44
6	4000	0.390	1,559.35
7	4000	0.333	1,332.78
8	4000	0.285	1,139.13
9	4000	0.243	973.61
10	4000	0.208	832.15
11	4000	0.178	711.24
12	6000	0.152	911.84
13	6000	0.130	779.35
14	6000	0.111	666.11
15	6000	0.095	569.33
16	6000	0.081	486.61
17	6000	0.069	415.90
18	6000	0.059	355.47
19	6000	0.051	303.82
20	6000	0.043	259.68
21	6000	0.037	221.95
22	6000	0.032	189.70
23	6000	0.027	162.13
24	6000	0.023	138.58
25	6000	0.020	118.44
26	10000	0.017	168.72
27	10000	0.014	144.21
28	10000	0.012	123.25
29	10000	0.011	105.34
30	10000	0.009	90.04
31	10000	0.008	76.96
32	10000	0.007	65.77
33	10000	0.006	56.22
34	10000	0.005	48.05
35	10000	0.004	41.07
36	10000	0.004	35.10
37	10000	0.003	30.00
38	10000	0.003	25.64
39	10000	0.002	21.92
40	10000	0.002	18.73
		Present Value	25,121

Question 2 Calculation of FUTURE VALUE

Year	Cash Flow	Invested for Years	Future Value Factor @17%	Present Value
1	3000	39	456.298	1,368,894.14
2	4000	38	389.998	1,559,993.32
3	4000	37	333.332	1,333,327.62
4	4000	36	284.899	1,139,596.26
5	4000	35	243.503	974,013.90
6	4000	34	208.123	832,490.51
7	4000	33	177.883	711,530.35
8	4000	32	152.036	608,145.60
9	4000	31	129.946	519,782.56
10	4000	30	111.065	444,258.60
11	4000	29	94.927	379,708.21
12	6000	28	81.134	486,805.39
13	6000	27	69.345	416,072.98
14	6000	26	59.270	355,617.94
15	6000	25	50.658	303,946.95
16	6000	24	43.297	259,783.72
17	6000	23	37.006	222,037.37
18	6000	22	31.629	189,775.53
19	6000	21	27.034	162,201.31
20	6000	20	23.106	138,633.59
21	6000	19	19.748	118,490.25
22	6000	18	16.879	101,273.72
23	6000	17	14.426	86,558.73
24	6000	16	12.330	73,981.82
25	6000	15	10.539	63,232.33
26	10000	14	9.007	90,074.54
27	10000	13	7.699	76,986.79
28	10000	12	6.580	65,800.67
29	10000	11	5.624	56,239.89
30	10000	10	4.807	48,068.28
31	10000	9	4.108	41,084.00
32	10000	8	3.511	35,114.53
33	10000	7	3.001	30,012.42
34	10000	6	2.565	25,651.64
35	10000	5	2.192	21,924.48
36	10000	4	1.874	18,738.87
37	10000	3	1.602	16,016.13
38	10000	2	1.369	13,689.00
39	10000	1	1.170	11,700.00
40	10000	0	1.000	10,000.00
			Future Value	13,411,254

Future Value = 13,411,254