11. Find the future value in six years of the following stream of payments: $400

Question

11. Find the future value in six years of the following stream of payments: $400 received one year from now, $600 received two years from now, $500 received three years from now and $800 received four years from now. Assume an annual interest rate of 6% with annual compounding. (8 pts.)

12. You invested $10,000 into a company at the end of 2004. If you were to sell your share of the company today (assume it is the end of 2010) you could get about $16,000 for it. What rate of return will you be earning on this investment? (3 pts.)

Explanation / Answer

year cash flow compounded value @6% future value of cash flow 1 400 1.338226 535.2902 2 600 1.262477 757.4862 3 500 1.191016 595.508 4 800 1.1236 898.88 future value at end of Year 6 2787.164

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