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Cannonier, Inc., has identified an investment project with the following cash flows. Year Cash Flow 1 $ 1,040 2 1,270 3 1,490 4 2,230 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 FV= $7,313.7

Explanation:

Giving the following information:

Year Cash Flow 1 $ 1,040 2 1,270 3 1,490 4 2,230

Discount rate= 9% = 0.09

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

FV= Cf*(1+i)^n

FV1= 1,040*(1.09^4)= 1,468.04

FV2= 1,270*(1.09^3)= 1.644.69

FV3= 1,490*(1.09^2)= 1,770.27

FV4= 2,230*1.09= 2,430.7

Total FV= $7,313.7

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