Fuente, Inc., has Identified an Investment project with the following cash flows

Question

Fuente, Inc., has Identified an Investment project with the following cash flows. Year 2 4 Cash Flow $960 1,190 1,410 2,150 a. If the discount rate Is 9 percent, what is the future value of these cash flows In Year 4? Do not round Intermediate calculetions and round your answer to 2 declmal places, e.g., 32.16.) b. If the discount rate Is 12 percent, what is the future value of these cash flows In Year 4? (Do not round Intermediate calculetions and round your answer to 2 declmal places, e.g., 32.16.) If the discount rate is 23 percent, what is the future value of these cash flows In Year 4? (Do not round Intermedlete calculetlons and round your answer to 2 declmal places, e.g., 32.16.) c. Future value at g% Future value at 12% Future value at 23% a. b. c.

Explanation / Answer

Hi,

Assuming that all the cash flows are transacted at year end. therefore the first cash flow would be disounted for three yearse. using the three rates to define the future flows.

Rate = 9% Year Cash Flow Future Value= Cash flow*(1+r)^(4-year) 1 960 1243.22784 2 1190 1413.839 3 1410 1536.9 4 2150 2150 Total 6343.97 Rate = 12% Year Cash Flow Future Value= Cash flow*(1+r)^(4-year) 1 960 1348.73088 2 1190 1492.736 3 1410 1579.2 4 2150 2150 Total: 6570.66688 Rate = 23% Year Cash Flow Future Value= Cash flow*(1+r)^(4-year) 1 960 1786.43232 2 1190 1800.351 3 1410 1734.3 4 2150 2150 Total 7471.08332

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