question 5

LO 1 3. Future Value and Multiple Cash Flows Wells, Inc., has identified an investment project with the following cash flows. If the discount rate is 8 percent, what is the future value of these cash flows in Year 4? What is the future value at an interest rate of 11 percent? At 24 percent? Year Cash Flow 1 $ 865 1,040 1,290 1,385 4 LO1 4. Calculating Annuity Present Values An investment offers $6,125 per year for 15 years, with the first payment occurring one year from now. If the required return is 8 percent, what is the value of the investment? What would the value be if the payments occurred for 40 years? For 75 years? Forever? 5. Calculating Annuity Cash Flows For each of the following annuities, calculate the annual cash flow. LO 1 Years Interest Rate Present Value $ 15,000 21,400 145,300 325,000 6 8 15 20 11% 7 8 6