Question

Compute the future value of a $180 cash flow for the following combinations of rates and times. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

a. r = 8%; t = 10 years

b. r = 8%; t = 20 years

c. r = 4%; t = 10 years

d. r = 4%; t = 20 years

Answer 1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

A B DE PMT 1/Y Interest rate (r) 8% 8% 4 5 6 a. b. C. d. 180 180 180 180 Year (t) 10 20 10 20 Future value $2,607.58 $8,237.15 $2,161.10 $5,360.05 4 4 % %

Cell reference -

A N 3 4 5 6 a. b. c. d. B C D PMT 1/Y Annual Cash Flow Interest rate (r) Year (t) 180 0.08 10 180 0.08 20 180 0.04 10 180 E FV Future value =FV(C3,D3,-B3,,0) =FV(C4,D4,-B4,,0) =FV(C5,D5,-B5,,0) =FV(C6,D6,-B6,0) 0.04

Hope it will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.