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Compute the future value of a $190 cash flow for the following combinations of rates and times
Compute the future value of a $190 cash flow for the following combinations of rates and times. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
a. r = 7%; t = 10 years
b. r = 7%; t = 20 years
c. r = 3%; t = 10 years
d. r = 3%; t = 20 years
Expert Solution
a). Computation of the future value:-
FV = PV*(1+rate)^n
= $190*(1+7%)^10
= $190*1.9672
= $373.76
b). Computation of the future value:-
FV = PV*(1+rate)^n
= $190*(1+7%)^20
= $190*3.8697
= $735.24
c). Computation of the future value:-
FV = PV*(1+rate)^n
= $190*(1+3%)^10
= $190*1.3439
= $255.34
d). Computation of the future value:-
FV = PV*(1+rate)^n
= $190*(1+3%)^20
= $190*1.8061
= $343.16
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