Final answer:
The future value of the cash flows in year 4 can be calculated using the formula Future Value = Present Value x (1 + Discount Rate)^Number of Years. By substituting the values given, we can find the future value.
Step-by-step explanation:
The future value of cash flows can be calculated using the formula:
Future Value = Present Value x (1 + Discount Rate)Number of Years
In this case, we need to find the future value of the cash flows in year 4. Since the discount rate is 12 percent, we can substitute the values into the formula:
Future Value = Present Value x (1 + 0.12)4
Let's calculate the future value:
Future Value = Present Value x 1.5735
So, the future value of these cash flows in year 4 is 1.5735 times the present value.