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FV of multiple cash flows: International Shippers, Inc., have forecast earnings of $1,233,400, $1,345,900, and $1,455,650 for the next three years. What is the future value of these earnings if the firm’s opportunity cost is 13 percent? (Round to the nearest dollar.)

Respuesta :

Answer:

$4,551,445

Explanation:

The first step is to find the present value of the forecasted earnings. then the future value would be calculated.

Present value can be calculated using a financial calculator

Cash flow in year 1 = $1,233,400

Cash flow in year 2 =$1,345,900

Cash flow in year 3 =$1,455,650

i = 13%

Present value = $3,154,380.01

Future value = present value x (i + r)^n

$3,154,380.01 x (1.13)^3 = $4,551,445

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

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