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Consider the following timeline detailing a stream of cash flows: Date 1 3 4 $100 $200 $300 $400 $500 ? Cash flow If the current market rate of interest is 9%, then the future value (FV) of this stream of cash flows is closest to: LO

Consider the following timeline detailing a stream of cash flows: Date 1 3 4 $100 $200 $300 $400 $500 ? Cash flow If the current market rate of interest is 9%, then the future value (FV) of this stream of cash flows is closest to: LO

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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**Educational Website Text: Future Value of Cash Flows** Consider the following timeline detailing a stream of cash flows: - **Timeline Diagram:** - **Date:** - 0: $100 - 1: $200 - 2: $300 - 3: $400 - 4: $500 - 5: ? - **Cash Flow:** - This diagram shows cash flows occurring at the end of each period, from Date 0 to Date 4, with the amounts specified above. If the current market rate of interest is 9%, then the future value (FV) of this stream of cash flows is closest to: - **Multiple Choice Options:** - A. $1,845 - B. $2,952 - C. $1,500 - D. $2,214 **Instructions:** To find the future value of the given cash flows, apply the formula for future value using a 9% interest rate for each respective period. Calculate the future value for each cash flow amount individually, then sum them to find the total future value at Date 5. Select the closest answer from the options provided.
Transcribed Image Text:**Educational Website Text: Future Value of Cash Flows** Consider the following timeline detailing a stream of cash flows: - **Timeline Diagram:** - **Date:** - 0: $100 - 1: $200 - 2: $300 - 3: $400 - 4: $500 - 5: ? - **Cash Flow:** - This diagram shows cash flows occurring at the end of each period, from Date 0 to Date 4, with the amounts specified above. If the current market rate of interest is 9%, then the future value (FV) of this stream of cash flows is closest to: - **Multiple Choice Options:** - A. $1,845 - B. $2,952 - C. $1,500 - D. $2,214 **Instructions:** To find the future value of the given cash flows, apply the formula for future value using a 9% interest rate for each respective period. Calculate the future value for each cash flow amount individually, then sum them to find the total future value at Date 5. Select the closest answer from the options provided.
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