Question

Booker, Inc., has identified an investment project with the following cash flows. Year Cash Flow 1 $ 1,060 2 1,290 3 1,510 4 2,250 If the discount rate is 6 percent, what is the future value of these cash flows in Year 4? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

Answer: 6956,27

Explanation:

This is a case of multiple cash flow. The future value is the sum of Cash Flows of each period. And each cash flow must be updated with the corresponding discount rate.

So we have to add the future value of each individual cash flow to determine the future value of the investment in Year 4.

(Calculations can be seen in the attached).