Question

g If you could reinvest the cash flow stream of $798, $508, $509, $967, $503, $1,362, $1,015, and $1,387 at 8.6% interest, how much will you have from this investment in 8 years? (In other words, what is the future value of this stream of cash flows?) Note that the cash flows are not necessarily the same as the previous problem's cash flows. The cash flow stream starts in one year; so, the last cash flow is 8 years from now. Round to the nearest cent.

Answer 1

$4,707.92

Step-by-step explanation:

Present value is the sum of discounted cash flows

Present value can be calculated using a financial calculator

Cash flow in year 1 = $798

Cash flow in year 2 = $508

Cash flow in year 3 = $509

Cash flow in year 4 = $967

Cash flow in year 5= $503

Cash flow in year 6 = $1,362

Cash flow in year 7 = $1,015

Cash flow in year 8 = $1,387

I = 8.6%

Present value = $4,707.92

To find the PV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute