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Future Value and Multiple Cash Flows

Business & Finance
Tutor: None Selected Time limit: 1 Day

Toadies, Inc., has identifed an investment project with the following cash flows. If the discount rate is 8 percent, what is the future value of these cash flows in Year 4? What is the future value at a discount rate of 11 percent? At 24 percent?

Oct 10th, 2014

A1 = $940
A2 = $1090
A3 =$ 1340
A4 = $41,405

1)

rate , r = 8%
N = 4
FV = A1(1+r)^3 + A2(1+r)^2 + A3(1+r)^1 +A4
= 940(1.08^3) + 1090(1.08^2) + 1340*1.08 + 41,405
=$45,307.70
2) Rate = 11%
FV = A1(1+r)^3 + A2(1+r)^2 + A3(1+r)^1 +A4
= 940(1.11^3) + 1090(1.11^2) + 1340*1.11 + 41,405
= $45,520.96
3)
Rate = 24%
FV = A1(1+r)^3 + A2(1+r)^2 + A3(1+r)^1 +A4
= 940(1.24^3) + 1090(1.24^2) + 1340*1.24 + 41,405
= $46,534.81

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Oct 10th, 2014

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