Question

Fuente, Inc., has identified an investment project with the following cash flows.

Year	Cash Flow
1	$675
2	900
3	1,075
4	1,425

a.	If the discount rate is 9 percent, what is the future value of these cash flows in year 4?

      

b.	What is the future value at a discount rate of 19 percent?

      

c.	What is the future value at discount rate of 29 percent?

      

Answer 1

D6 for =SUM(D2:05) 1 year FV@9% $ Cash flows 675.00 $ 900.00 1,075.00 $ 1,425.00 Future value 1.2950 $ 874.14 1.1881 $ 1,069.29 1.0900 $ 1,171.75 1.0000 $ 1,425.00 $ 4,540.18 4 Future Value wear FV@19% Cash flows $ 675.00 $ 900.00 $ 1,075.00 $ 1,425.00 Future value 1.6852 $ 1,137.48 1.4161 $ 1,274.49 1.1900 $ 1,279.25 1.0000 $ 1,425.00 $ 5,116.22 Future Value year FV@29% Cash flows 1 $ 675.00 2 $ 900.00 3 $ 1,075.00 $ 1,425.00 Future value 2.1467 $ 1,449.02 1.6641 $ 1,497.69 1.2900 $ 1,386.75 1.0000 $ 1,425.00 $ 5,758.46 Future Value

D6 fix =SUM(D2:05) 1 year 21 32 4 3 5 4 Cash flows 675 900 1075 1425 FV@9% =C3*1.09 =C4*1.09 =C5*1.09 Future value =B2*C2 =B3*C3 =B4*C4 =B5*C5 =SUM(D2:05) Future Value year Cash flows 675 900 FV @19% =C10*1.19 =C11*1.19 =C12*1.19 Future value =B9*C9 =B10*C10 =B11*011 =B12*012 =SUM(D9:012) 10 2 11 3 12 4 13 075 1425 Future Value 14 15 year 16 1 17 2 18 3 19 4 Cash flows 675 900 FV@29% =C17*1.29 =C18*1.29 =C19*1.29 Future value =B16*C16 =B17*C17 =B18*C18 =B19*C19 =SUM(D16:D19) 1075 1425 Future Value