Please show all work Cannonier, Inc., has identified an investment project with
ID: 2615169 • Letter: P
Question
Please show all work
Cannonier, Inc., has identified an investment project with the following cash flows.
Year Cash Flow
1 $ 1,080
2 1,310
3 1,530
4 2,270
If the discount rate is 9 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.)
Future value $
What is the future value at a discount rate of 12 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Future value $
What is the future value at a discount rate of 23 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Future value $
2. First City Bank pays 8 percent simple interest on its savings account balances, whereas Second City Bank pays 8 percent interest compounded annually. If you made a $74,000 deposit in each bank, how much more money would you earn from your Second City Bank account at the end of 8 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Difference in accounts?
Explanation / Answer
Answer 1-a.
Cash Flows:
Year 1 = $1,080
Year 2 = $1,310
Year 3 = $1,530
Year 4 = $2,270
Discount Rate = 9%
Future Value = $1,080*1.09^3 + $1,310*1.09^2 + $1,530*1.09 + $2,270
Future Value = $6,892.74
Answer 1-b.
Cash Flows:
Year 1 = $1,080
Year 2 = $1,310
Year 3 = $1,530
Year 4 = $2,270
Discount Rate = 12%
Future Value = $1,080*1.12^3 + $1,310*1.12^2 + $1,530*1.12 + $2,270
Future Value = $7,144.19
Answer 1-c.
Cash Flows:
Year 1 = $1,080
Year 2 = $1,310
Year 3 = $1,530
Year 4 = $2,270
Discount Rate = 23%
Future Value = $1,080*1.23^3 + $1,310*1.23^2 + $1,530*1.23 + $2,270
Future Value = $8,143.54
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.