Question: Hi, is a & b correct? please help because I got stuck on c & d. Thanks Today is January 1, year 1. Assuming an
Hi, is a & b correct? please help because I got stuck on c & d. Thanks
Today is January 1, year 1. Assuming an 8% discount rate, what is the future value of each of the following cash flows?
a. Future value in 3 years of $50 received now, i.e., the value on December 31, year 3
FV = PV x (1+i)n, FV = 50 x (1.08)3 = 62.99
b. Future value in 100 years of $50 received now, i.e., the value on December 31, year 100
FV = PV x (1+i)n, FV = 50 x (1.08)100 = 109,988.06
c. Future value at the end of 20 years of $50 received each year at the end of the year, i.e., the value at December 31, year 20, with one payment received each December 31 from year 1 to year 20
d. Future value at the end of 20 years of $50 received each year at the beginning of the year, i.e., the value at December 31, year 20, with one payment received each January 1 from year 1 to year 20.
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