Question

Troy will receive $7,500 at the end of Year 2. At the end of the following two years, he will receive $9,000 and $12,500, respectively. What is the future value of these cash flows at the end of Year 6 if the interest rate is 8%?a. $36.121.08.b. $38,418.80.c. $32,90767.d. $39,010.77.e. $33,445.44.

Answer 1

Total FV= $36,121.08

Step-by-step explanation:

Giving the following information:

Cash flows:

Cf2= $7,500

Cf3= $9,000

Cf4= $12,500

Interest rate= 8%

To calculate the future value, we need to use the following formula on each cash flow:

FV= PV*(1+i)^n

Cf2= 7,500*(1.08^4)= 10,203.67

Cf3= 9,000*(1.08^3)= 11,337.41

Cf4= 12,500*(1.08^2)= 14,580

Total FV= $36,121.08