Asked Oct 3, 2019

What is the value in year 15 of a $260 cash flow made in year 4 if interest rates are 12 percent? (Do not round intermediate calculations. Round your answer to 2 decimal places.)



Expert Answer

Step 1

Future value can be defined as the monetary value of an asset on an individual date in future assuming a specified growth rate.

It is given that,

The amount of cash flow is $26.

Growth rate is 12%.

Since the cash flow occur in year 4, the interest rate will be applicable for 11 years.

Step 2

The formula to calculate future value is given below:


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п Future value Present value x (1+i Here i is interest rate n is number of years

Step 3

Substitute $260 for present value, 11 for n and ...


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Future value $260x (1+12%) 11 S260x(1+0.12) -$260 x3.478549 =$904.42


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