You invest $17000 in year 0

Finance Dec 10, 2020

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?

Expert Solution

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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