Lucas will receive $6,800, $8,700, and $12,500 each year starting at the end of year one. What is the future value of these cash flows at the end of year five if the interest rate is 7 percent?

Question

Quizplus · Accepted Answer

The future value of each cash flow is calculated separately and then summed up. The future value of $6,800 at the end of year five is $6,800 * (1.07)^4, the future value of $8,700 is $8,700 * (1.07)^3, and the future value of $12,500 is $12,500 * (1.07)^2. Adding these values gives the total future value of $33,883.

Lucas Will Receive $6,800, $8,700, and $12,500 Each Year Starting