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Saved Help Save & Exit Submit The value of the following cash flows four years from today is $8.210.59. The interest rate is
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Answer #1
Using the future value formula we can calculate the cash flow in year 3
Future value of cash flow in year 1 + Future value of cash flow in year 2 + Future value of cash flow in year 3 + Future value of cash flow in year 4 = $8210.59
1675*(1.054^3)+1872*(1.054^2)+x*(1.054^1)+2915*(1.054^0) = $8210.59
1961.27+2079.64+1.054x + 2915 = 8210.59
6955.90+1.054x = 8210.59
1.054x = 8210.59-6955.90
x = (1254.69/1.054)
x $1,190
Thus, cash flow in year 3 is $1,190
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