For the cash flows shown, determine the future worth in year 5.
Year Cash Flow, $/Year Estimated i Per Year
0 5000 12%
1– 4 6000 12%
5 9000 20%
What will be an ideal response?
First move cash flow in years 0-4 to year 4 at i = 12%; move the total to year 5 at i = 20%.
F 4 = 5000(F/P,12%,4) + 6000(F/A,12%,4)
= 5000(1.5735) + 6000(4.7793)
= $36,543
F 5 = 36,543(F/P,20%,1) + 9000
= 36,543(1.20) + 9000
= $52,852
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