A sum of money, X, will be received 6 years from now. At 6% annual interest, the

Question

A sum of money, X, will be received 6 years from now. At 6% annual interest, the present worth of X is $75. What will the value of X be in 10 years? Draw a cash flow diagram representing the problem.

Explanation / Answer

X/(1.06^6) = 75 =>X = 106.3889334 Value of X in 10 years = 75*(1.06^10) = 134.3135772 Value after 1 year = 79.50 Value after 2 year = 84.27 Value after 3 year = 89.33 Value after 4 year = 94.69 Value after 5 year = 100.37 Value after 6 year = 106.39 Value after 7 year = 112.77 Value after 8 year = 119.54 Value after 9 year = 126.71 Value after 10 year = 134.31

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