Moving Cash Flows What is the value in year 5 of a $600 cash flow made in year 10 when interest rates are 5 percent?
A)$368.35
B)$450.00
C)$470.12
D)$570.00

Question

Quizplus · Accepted Answer

To move the cash flow from year 10 to year 5, we need to discount it back to year 5 using the formula: 
PV = FV / (1 + r)n
where PV is the present value, FV is the future value, r is the interest rate, and n is the number of years.

In this case, we have:
PV = 600 / (1 + 0.05)5
PV = $470.12

Therefore, the value of the $600 cash flow made in year 10 in year 5 when interest rates are 5 percent is $470.12. The closest answer choice is C, so the correct answer is C.

Moving Cash Flows What Is the Value in Year 5