Present value=Cash flows*Present value of discounting factor(rate%,time period)
=50/1.09+50/1.09^2+50/1.09^3+250/1.09^4+300/1.09^5+500/1.09^6
=$796.78(Approx)
We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period
Future value=796.78*(1.09)^6
=$1336.29(Approx)
SOLUTION :
Discount rate, r = 9% = 0.09
=> 1 + r = 1.09
PV
= 50/1.09+50/1.09^2+50/1.09^3+250/1.09^4+300/1.09^5+500/1.09^6
= 796.78 ($) (ANSWER).
FV
= PV*1.06^6
= 796.78*1.09^6
= 1336.29 ($) (ANSWER)
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> Under FV, first line, please correct " = PV*1.06^6 " as " = PV *1.09^6 "
Tulsiram Garg Thu, Oct 14, 2021 3:07 AM