Question

A step by step explanation would be greatly appreciated! I am not the best with excel or a calculator so a walk through to the answers would be helpful!

Booker, Inc., has identified an investment project with the following cash flows. Year Cash Flow $1,000 1,230 1,450 2,190 m If the discount rate is 9 percent, what is the future value of these cash flows in Year 4? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Future value $ What is the future value at an interest rate of 12 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Future value $ What is the future value at an interest rate of 23 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Future value $O

Answer 1

FV = PV(1 + r)^t FV @ 9% = $1,000(1.09)^3 + $1,230(1.09)^2 + $1,450(1.09) + $2,190 = $6,526.89 FV @ 12% = $1,000(1.12)^3 + $1,230(1.12)^2 + $1,450(1.12) + $2,190 = $6,761.84 FV @ 23% = $1,000(1.23)^3 + $1,230(1.23)^2 + $1,450(1.23) + $2,190 = $7,695.23 FV = Future Value PV = Present Value r = Rate of interest t = Number of years