Question

3. What is the Future Value at Year 23 of the following cash flows given an interest rate of 4%? 325 250 250 250 250 13 14 17
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Answer #1

Interest Rate = 4%

Cash flow at 13 to 16 year = 250

Cash outflow at 17 year = 160

Cash inflow at year 18 = 325

What is the future value at year 23?

First calculate the Future Value at 18th year and then take it to the 23rd year.

FV = [250 (F/A, 4%, 4) (F/P, 4%, 2) – 160 (F/P, 4%, 1) + 325] (F/P, 4%, 5)

FV = [250 (4.24646) (1.08160) – 160 (1.04000) + 325] (1.21665)

FV = 1,589.9 or 1,590

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