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Grace [21]
3 years ago
11

At a rate of 6.5%, what is the future value of the following cash flow stream?

Business
1 answer:
ad-work [718]3 years ago
6 0

Answer:

Total future value= $645.8

Explanation:

Giving the following information:

Year 0 1 2 3 4

CFs: $0 $75 $225 $0 $300

Interest rate= 6.5%

<u>To calculate the future value, we need to use the following formula on each cash flow:</u>

FV= PV*(1+i)^n

Cf1= 75*1.065^3= 90.60

Cf2= 225*1.065^2= 255.20

Cf3= 0

Cf4= 300

Total future value= $645.8

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