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Compute the future value of a $95 cash flow for the following combinations of rates and times
Compute the future value of a $95 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
Computation of Future Value using FV Function in Excel:
=fv(rate,nper,pmt,-pv)
a.r = 7%; t = 10 years:
Here,
FV = Future Value = ?
Rate = 7%
Nper = 10 years
PMT = 0
PV = $95
Substituting the values in formula:
=fv(7%,10,0,-95)
FV or Future Value = $186.88
b.r = 7%; t = 20 years:
Here,
FV = Future Value = ?
Rate = 7%
Nper = 20 years
PMT = 0
PV = $95
Substituting the values in formula:
=fv(7%,20,0,-95)
FV or Future Value = $367.62
c.r = 3%; t = 10 years:
Here,
FV = Future Value = ?
Rate = 3%
Nper = 10 years
PMT = 0
PV = $95
Substituting the values in formula:
=fv(3%,10,0,-95)
FV or Future Value = $127.67
d.r = 3%; t = 20 years:
Here,
FV = Future Value = ?
Rate = 3%
Nper = 20 years
PMT = 0
PV = $95
Substituting the values in formula:
=fv(3%,20,0,-95)
FV or Future Value = $171.58
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