Cannonier, In., has identified an investmentproject with the following cash flows:Year Cash Flow1$1,05021,28031,50042,240If the discount rate is 7 percent, what is thefuture value of these cash flows in Year 4?

In this question we need to compute the future value of stream of cash flows after 4 years. Future…

Cannonier, Inc., has identified an investment project with the following cash flows: Year Cash Flow 1 $1,050 2 1,280 1,500 4 2,240 If the discount rate is 7 percent, what is the future value of these cash flows in Year 4?

Cannonier, Inc., has identified an investment project with the following cash flows: Year Cash Flow 1 $1,050 2 1,280 1,500 4 2,240 If the discount rate is 7 percent, what is the future value of these cash flows in Year 4?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 1CMA

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

Cannonier, In., has identified an investment
project with the following cash flows:
Year Cash Flow
1
$1,050
2
1,280
3
1,500
4
2,240
If the discount rate is 7 percent, what is the
future value of these cash flows in Year 4?

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