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Homework answers / question archive / You invest $17000 in year 0

You invest $17000 in year 0

Finance

You invest $17000 in year 0.

Year 1 payout is $3244. Year 2 payout is $6532. Year 3 payout is $5059.

Interest rate is 3% p.a.

What is the future value of the cashflow after 3 years?

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Future Value        
Last period= 3      
Compounding rate 3.000%      
Year 0 1 2 3
Cash flow stream -17000 3244 6532 5059
Compounding factor 1.093 1.061 1.030 1.000
Compounded cash flows   -18576.359 3441.560 6727.960 5059.000
FV = Sum of compounded cash flows        
FV= -3347.84      
Where        
Compunding factor = (1 + rate)^(Last period-Corresponding period in years)  
Compounded Cashflow= Cash flow stream*compounding factor

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