Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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![**Future Value of Cash Flow Stream**
**Problem Statement:**
At a rate of 10.0%, what is the future value of the following cash flow stream?
**Cash Flows by Year:**
- Year 0: $0
- Year 1: $75
- Year 2: $225
- Year 3: $0
- Year 4: $300
**Multiple Choice Options:**
a. $672
b. $746
c. $726
d. $820
e. $544
To solve this, calculate the future value (FV) of each cash flow at Year 4 using the formula for future value:
\[ FV = CF \times (1 + r)^n \]
Where:
- \( CF \) = Cash Flow
- \( r \) = Interest rate (10% or 0.10)
- \( n \) = Number of years until Year 4
Calculate the future value of each cash flow and sum them to find the total future value. Compare with the options provided.](https://content.bartleby.com/qna-images/question/8ede43bb-e880-4024-8d83-4554574c0cce/4020c6d0-7792-4189-baad-f46d2175058d/0h8ybn_processed.jpeg)
Transcribed Image Text:**Future Value of Cash Flow Stream**
**Problem Statement:**
At a rate of 10.0%, what is the future value of the following cash flow stream?
**Cash Flows by Year:**
- Year 0: $0
- Year 1: $75
- Year 2: $225
- Year 3: $0
- Year 4: $300
**Multiple Choice Options:**
a. $672
b. $746
c. $726
d. $820
e. $544
To solve this, calculate the future value (FV) of each cash flow at Year 4 using the formula for future value:
\[ FV = CF \times (1 + r)^n \]
Where:
- \( CF \) = Cash Flow
- \( r \) = Interest rate (10% or 0.10)
- \( n \) = Number of years until Year 4
Calculate the future value of each cash flow and sum them to find the total future value. Compare with the options provided.
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- Year Cash Inflow1 14,0002 19,0003 31,0004 05 06 07 130,000 what is the future value of this cash flow at 3%, 11%, and 18% interest rates at the end of year 7arrow_forwardConsider the following timeline detailing a stream of cash flows: Date $1000 $2000 Cash flow O $14,311 If the current market rate of interest is 9%, then the future value (FV) of this stream of cash flows at the end of year 4 is closest to: O $11,926 O $5,963 $3000 $4000 $19,082 ?arrow_forwardIn the following cash flows diagram, Determine the Future Worth at the end of year 12 if the interest rate is 6% ? $200 $200 $150 $150 $100 $100 1 2 3 4 5 Years a. $1.445.8 Ob. $1364 Oc $1.532.6 Od. $1.286.8arrow_forward
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- What is the present value of the following cash flow stream at a rate of 6.25%? $411.57 $433.23 $456.03 $480.03 $505.30arrow_forwardQUESTION 1 For the below Cash Flow, find the total PW value using 10% interest rate years 0 1 2 3 4 5 6 cost $ 2,719 1,000.00 3,010 4,000.00 1,000.00arrow_forwardWhat is the present value of an investment with the following cash flows? Year 1 $14,000 Year 2 $20, 000 Year 3 $30,000 Year 4. $ 43,000 Year 5. $ 57,000 Use a 7% discount rate, and round your answer to the nearest $1. a. $128, 487 b. $107, 328 c. $112, 346 d. $ 153, 272arrow_forward
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