Wells, Inc., has identified an investment project with the following cash flows. Year Cash Flow 1 $ 1,060 2 1,290 3 1,510 4 2,250 a. If the discount rate is 6 percent, what is the future value of these cash flows in Year 4? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.) b. What is the future value at an interest rate of 14 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.) c. What is the future value at an interest rate of 21 percent?

Question

Business

Arielle

20 March, 23:25

Wells, Inc., has identified an investment project with the following cash flows. Year Cash Flow 1 $ 1,060 2 1,290 3 1,510 4 2,250 a. If the discount rate is 6 percent, what is the future value of these cash flows in Year 4? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.) b. What is the future value at an interest rate of 14 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.) c. What is the future value at an interest rate of 21 percent?

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Answers (1)

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Carolina Whitney · Answer 1

Instructions are listed below

Explanation:

Giving the following information:

Cash Flow:

1 $ 1,060

2 1,290

3 1,510

4 2,250

A) i = 0.06

FV = PV * (1+i) ^n

1 = 1060 * (1.06) ^4 = $1,338.23

2 = 1290 * (1.06^3 = $1,536.41

3 = $1,696.64

4 = $2,385

Total = $6,956.28

B) i=14%

1 = 1060 * (1.14^4) = $1,790.30

2 = $1,911.19

3 = $1,962.40

4 = $2,565

Total = $8,28.90

C) i = 21%

FV = $9,490.81