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Given the following cash flows, what is the future value at year six when compounded at an interest rate of 8.0%? Year 2 6 Cash Flow $5,000 $7,000 $9,000 $11,000

Given the following cash flows, what is the future value at year six when compounded at an interest rate of 8.0%? Year 2 6 Cash Flow $5,000 $7,000 $9,000 $11,000

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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Question 30

**Question 30:** Given the following cash flows, what is the future value at year six when compounded at an interest rate of 8.0%? | Year | Cash Flow | |------|-----------| | 0 | $5,000 | | 2 | $7,000 | | 4 | $9,000 | | 6 | $11,000 | Options: - A) $38,955.39 - B) $56,687.43 - C) $42,074.42 - D) $32,000.00 **Explanation:** This question involves calculating the future value of a series of cash flows at different times, using a compound interest rate of 8%. The goal is to determine the total value of these cash flows at year six. Each cash flow amount must be compounded individually to year six, taking into account the time from the year the cash flow occurs to year six. Then, sum the compounded values to find the total future value.
Transcribed Image Text:**Question 30:** Given the following cash flows, what is the future value at year six when compounded at an interest rate of 8.0%? | Year | Cash Flow | |------|-----------| | 0 | $5,000 | | 2 | $7,000 | | 4 | $9,000 | | 6 | $11,000 | Options: - A) $38,955.39 - B) $56,687.43 - C) $42,074.42 - D) $32,000.00 **Explanation:** This question involves calculating the future value of a series of cash flows at different times, using a compound interest rate of 8%. The goal is to determine the total value of these cash flows at year six. Each cash flow amount must be compounded individually to year six, taking into account the time from the year the cash flow occurs to year six. Then, sum the compounded values to find the total future value.
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