To compute the future value of a cash flow,you must:
A)discount it.
B)compound it.
C)double it.
D)arbitrage it.
E)first find the present value.

Question

Quizplus · Accepted Answer

To find the future value of a cash flow, you need to compound it by adding the interest earned. Therefore, choice B (compound it) is the best choice. Discounting (A) would give you the present value, doubling (C) and arbitraging (D) are not relevant to finding the future value. It is not necessary to find the present value (E) before calculating the future value.

To Compute the Future Value of a Cash Flow,you Must