Suppose you receive 10000 today 20000 one year from today an

Suppose you receive $10,000 today, $20,000 one year from today, and $30,000 two years from today. Note: Round your answers to the nearest dollar Find the present value of cash flows if the interest rate is 7-5% per year. a. $60,000 b $56,259 c. $46,259 d. $54,422 Find the future value of cash flows if the interest rate is ,,--500 per year. e. $60,000 f. $50,000 g. $30,148 h. $62,026 i. $56,259

Solution

1.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=10000+20000/1.05+30000/1.05^2

=$56259(Approx).

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

2.A=$56259(1.05)^2

=$62026(Approx).