FV of multiple cash flows: International Shippers, Inc., have forecast earnings of $1, 233,400, $1,345,900, and $1,455,650 for the next three years. What is the future value of these earnings if the firm's opportunity cost is 13 percent? (Round to the nearest dollar.)

Question

Quizplus · Accepted Answer

We can use the formula FV = CF1 x (1+r)^n1 + CF2 x (1+r)^n2 + CF3 x (1+r)^n3, where CF is cash flow, r is the discount rate, and n is the number of periods. Plugging in the values, we get FV = 1,233,400 x (1+0.13)^1 + 1,345,900 x (1+0.13)^2 + 1,455,650 x (1+0.13)^3 = $4,551,446. Therefore, the correct answer is B.

FV of Multiple Cash Flows: International Shippers, Inc