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Different Cash Flow. Give the following cash inflow at the end of each year, what is the future value of this cash flow at %7, %12, %16 , interest rates at the end of the year 7 ?


Homework: Chapter 4 Homewo rk Score: 0 of 1 pt 1 of 16 (13 complete) P4-1 (similar to) Different cash flow. Given the followi
i Data Table - X (Click on the following icon in order to copy its contents into a spreadsheet.) Year 1: $13,000 $21,000 $30,
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Answer #1

We need to calculate the FV of each of the cash flows at given required rates of return.

This question requires application of basic time value of money function, according to which FV = PV * (1 + r) where FV is F

a) 7%

FV = 13000 * (1 + 7%)6 + 21000 * (1 + 7%)5 + 30000 * (1 + 7%)4 + 160000 * (1 + 7%)0

FV = 13000 * 1.50073 + 21000 * 1.40255+ 30000 * 1.31080 + 160000 * 1

FV = 19,509.49 + 29,453.59 + 39,323.88 + 160,000

FV = $248,287.0

b) 12%

FV = 13000 * (1 + 12%)6 + 21000 * (1 + 12%)5 + 30000 * (1 + 12%)4 + 160000 * (1 + 12%)0

FV = 13000 * 1.97382 + 21000 * 1.76234+ 30000 * 1.57352 + 160000 * 1

FV = 25,659.69 + 37,009.18 + 47,205.58 + 160,000

FV = $269,874.5

c) 16%

FV = 13000 * (1 + 16%)6 + 21000 * (1 + 16%)5 + 30000 * (1 + 16%)4 + 160000 * (1 + 16%)0

FV = 13000 * 2.43640 + 21000 * 2.10034+ 30000 * 1.81064 + 160000 * 1

FV = 31,673.15 + 44,107.17 + 54,319.18 + 160,000

FV = $290,099.5

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