Question

Cullumber, Inc., management expects the company to earn cash flows of $12,900, $16,300, $18,600, and $19,800 over the next four years. If the company uses an 10 percent discount rate, what is the future value of these cash flows at the end of year 4? (Round answer to 2 decimal places, e.g. 15.25. Do not round factor values.)

Answer 1

Answer:

$77,152.90

Explanation:

The computation of the future value is shown below:

Given that

Yearly cash flows

$12,900

$16,300

$18,600

$19,800

Discount rate = 10%

Time period = 4 years

So, the future value of these cash flows is

= $12,900 × (1.1)^3 + $16,300 × (1.1)^2 + $18,600 × (1.1)^1 + $19,800

After solving this the amount came is

= $77,152.90