Question

Chuck Brown will receive from his investment cash flows of $3,145, $3,470, and $3,810 at the end of years 1, 2 and 3 respectively. If he can earn 7.5 percent on any investment that he makes, what is the future value of his investment cash flows at the end of three years? (Round to two decimal places.)

Answer 1

the following is the calculation of the future value of investment at the end of three years:

note:investment received at the end of year 1 will be available for investment for 2 years, at the end of year 2 can be invested for one year.

year	amount invested	future value
1	3145	(3145*(1.075)^2)=>3,634.44
2	3470	(3470*(1.075)^1)=>3,730.25
3	3810	(3810*(1.075)^0)=>3,810
	Total	11,174.69