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?

Answer 1

Answer:

Total= $77,153

Explanation:

Giving the following information:

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.

The discount rate is 10%.

To calculate the future value, we need to use the following formula for each cash flow:

FV= PV*(1+i)^n

Cf1= 12,900*1.1^3= 17,169.9

Cf2= 16,300*1.1^2= 19,723

Cf3= 18,600*1.1= 20,460

Cf4= 19,800

Total= $77,153