If today is Year 0, what is the future value of the following cash flows 6 years from now?

If today is Year 0, what is the future value of the following cash flows 6 years from now? Assume an interest rate of 5.0 percent per year.

Year	Cash Flow
2	$8,500
3	$9,300
6	$7,100

Group of answer choices

$21,041.57
$23,266.73
$25,653.05
$28,197.72
$30,143.44

Expert Solution

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period

A=8500*(1.05)^4+9300*(1.05)^3+7100

=$28197.72(Approx)

jeff jeffy answered 2 years ago

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