The value today of the following cash flows is $6,300.69 at an
interest rate of 4.8 percent. What is the value of the Year 3 cash flow?
|
Year
|
Cash Flow
|
|||
|
1
|
|
$
|
1,515
|
|
|
2
|
|
|
1,645
|
|
|
3
|
|
|
?
|
|
|
4
|
|
|
2,255
|
|
|
|
||||
Multiple
Choice
$1,600.27
$1,487.92
Incorrect
$3,622.82
$1,712.63
Correct
$885.69
Explanation
PV = $1,515/1.048 +
$1,645/1.0482 + $2,255/1.0484 = $4,812.77
Difference = $6,300.69 − 4,812.77 = $1,487.92
FV = $1,487.92(1.048)3 = $1,712.63
Difference = $6,300.69 − 4,812.77 = $1,487.92
FV = $1,487.92(1.048)3 = $1,712.63
|
CFo
|
$0
|
|
C01
|
$1,515
|
|
F01
|
1
|
|
C02
|
$1,645
|
|
F02
|
1
|
|
C03
|
0
|
|
F03
|
1
|
|
C04
|
$2,255
|
|
F04
|
1
|
|
I = 4.8
|
|
|
NPV CPT
|
|
|
$4,812.77
|
|
Difference = $6,300.69 − 4,812.77 = $1,487.92
|
Enter
|
3
|
4.8%
|
−$1,487.92
|
|
|
||||||||||
|
|
|
N
|
|
|
I/Y
|
|
|
PV
|
|
|
PMT
|
|
|
FV
|
|
|
Solve for
|
|
|
|
|
$1,712.63
|
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