What is the future value of the following cash flows at the end of year 3 if the interest rate is 6 percent? The cash flows occur at the end of each year.

Question

Quizplus · Accepted Answer

Using the formula for future value of multiple cash flows:

FV = CF1 × (1 + r)n-1 + CF2 × (1 + r)n-2 + CF3 × (1 + r)n-3

FV = $5,000 × (1 + 0.06)2 + $7,000 × (1 + 0.06)1 + $10,000 × (1 + 0.06)0
FV = $18,246.25 (rounded to the nearest penny)

Therefore, the best choice is C.

What Is the Future Value of the Following Cash Flows