Toadies, Inc., has identified an investment project with the following cash flow

Question

Toadies, Inc., has identified an investment project with the following cash flows. Year Cash Flow 1= $ 1,375, Cash Flow 2= 1,495, Cash Flow 3=1,580, and 4 =1,630.

If the discount rate is 8 percent, what is the future value of the cash flows in year 4? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

If the discount rate is 11 percent, what is the future value of the cash flows in year 4? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

If the discount rate is 24 percent, what is the future value of the cash flows in year 4? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

Discount rate = 8%

1) FV in year 4 = 1375 * (1 + 0.08)3 + 1495 * (1 + 0.08)2 + 1580 * (1 + 0.08)1 + 1630 * (1 + 0.08)0

                         =$6,812.27

Discount rate = 11%

2) FV in year 4 = 1375 * (1 + 0.11)3 + 1495 * (1 + 0.11)2 + 1580 * (1 + 0.11)1 + 1630 * (1 + 0.11)0

                         =$7,106.28

Discount rate = 24%

3) FV in year 4 = 1375 * (1 + 0.24)3 + 1495 * (1 + 0.24)2 + 1580 * (1 + 0.24)1 + 1630 * (1 + 0.24)0

                         =$8,509.52

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.