Question

Compute the future value of a $130 cash flow for the following combinations of rates and times. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

a. r = 7%; t = 10 years
b. r = 7%; t = 20 years
c. r = 3%; t = 10 years
d. r = 3%; t = 20 years

Answer 1

Future Value formula = Amount * ( 1 + r) ^ no.of periods

a. Future Value = 130 * ( 1 + 7%) ^ 10

= $255.7296

= $255.73

b. Future Value = 130 * ( 1 + 7%) ^ 20

= $503.05898

= $503.06

c. Future Value = 130 * ( 1 + 3%) ^ 10

= $174.709

= $174.71

d. Future Value = 130 * ( 1 + 3%) ^ 20

= $234.794

= $234.79