Homework SourseHavana Inc has identified an investment project with the fol
Havana, Inc., has identified an investment project with the following cash flows. If the discount rate is 10 percent, what is the future value of these cash flows in Year 7? (Hint: Be careful with the number of periods.) If the picture doesn\'t load, the cash flows shown in the picture are as follows: 910 in year 1; 1140 in year 2; 1360 in year 3; and 2100 in year 4.
Solution
Present value = 4,225.54
Future value = 4,225.54 * 1.10^7 = 8,234.38
| Discount rate | 10.0000% | ||
| Cash flows | Year | Discounted CF= cash flows/(1+rate)^year | Cumulative cash flow |
| - | 0 | - | - |
| 910.000 | 1 | 827.27 | 827.27 |
| 1,140.000 | 2 | 942.15 | 1,769.42 |
| 1,360.000 | 3 | 1,021.79 | 2,791.21 |
| 2,100.000 | 4 | 1,434.33 | 4,225.54 |
