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Wells, Inc., has identified an investment project with the following cash flows. Year Cash Flow 1 $ 1,000 2 1,230 3 1,450 4 2,190 a. If the discount rate is 9 percent, what is the future value of these cash flows in Year 4

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Answer:

Total= $7,114.32

Explanation:

Giving the following information:

Cash Flow:

1 $ 1,000

2 1,230

3 1,450

4 2,190

Discount rate= 9%

To calculate the future value, we need to use the following formula on each cash flow:

FV= PV*(1+i)^n

Cf1= 1,000*1.09^4= 1,411.58

Cf2= 1,230*1.09^3= 1,592.89

Cf3= 1,450*1.09^2= 1,722.75

Cf4= 2,190*1.09= 2,387.1

Total= $7,114.32

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