Question

Phosfranc Inc., is expecting the following cash flows starting at the end of the year—$133,245, $152,709, $161,554, and $200,760. If their opportunity cost is 9.4 percent, find the future value of these cash flows.

Answer 1

To find the future value of the cash flows, use the formula for future value of a series of cash flows.

Step-by-step explanation:

To find the future value of the cash flows, we can use the formula for future value of a series of cash flows. The formula is to calculate the future value of cash flows for Phosfranc Inc., we need to apply the future value formula for each cash flow received at different points in time, given the opportunity cost (or discount rate) of 9.4%.

Future Value = Cash Flow1 * (1 + Interest Rate) ^ n1 + Cash Flow2 * (1 + Interest Rate) ^ n2 + Cash Flow3 * (1 + Interest Rate) ^ n3 + ...

Plugging in the given values, the future value of the cash flows can be calculated as follows:

Future Value = $133,245 * (1 + 0.094) + $152,709 * (1 + 0.094)^2 + $161,554 * (1 + 0.094)^3 + $200,760 * (1 + 0.094)^4