Consider the following cash flows: Assume an interest rate of 8.7 percent per ye

Question

Consider the following cash flows: Assume an interest rate of 8.7 percent per year. If today is Year 0, what is the future value of the cash flows five years from now? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g,, 32.16).) If today is Year 0, what is the future value of the cash flows ten years from now? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Explanation / Answer

5 Years from Now Year Cash Flow Working 2 21900 FV=21900*(1+0.087)^3 28127.60 3 39900 FV=39900*(1+0.087)^2 47144.60 5 57900 FV=57900*(1+0.087)^0 57900 Total 133172.20 Hence Future Value=133172.20 10 Years From Now Year Cash Flow Working 2 21900 FV=21900*(1+0.087)^8 42685.51 3 39900 FV=39900*(1+0.087)^7 71545.07 5 57900 FV=57900*(1+0.087)^5 87867.10 Total 202097.68 Hence Future Value = 202097.68

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