Given the following cash inflow at the end of each year what is the future value of this cash flow at 6%, 9% and 15% interest rate at the end of the seventh year? Year 1-$15,000 Year 2- $20,000 Year 3- $30,000 Years 4 through 6 - $0 Year 7- $150,000

Given the following cash inflow at the end of each year what is the future value of this cash flow at 6%, 9% and 15% interest rate at the end of the seventh year? Year 1-$15,000 Year 2- $20,000 Year 3- $30,000 Years 4 through 6 - $0 Year 7- $150,000

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 1MC

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

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Given the following cash inflow at the end of each year what is the future value of this cash
flow at 6%, 9% and 15% interest rate at the end of the seventh year?
Year 1- $15,000
Year 2- $20,000
Year 3- $30,000
Years 4 through 6 - $0
Year 7- $150,000

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