Answer to Question #221639 in Financial Math for sosi donda

Question

Year 3 return on investment is R45000, year 6 return is R90000, year 9 return is R115000. Interest rate is 11.59% and present value of outflows is R95000. what is the future value of cash inflows?

Answer 1

The future value is calculated using the formula;

$FV=PV(1+i)^n$

Present Value, (PV) = R95,000

Interest Rates, (i) = 11.59%

Number of Periods, n = 3

By substitution;

$FV = 95,000 [1 + (11.59/100)]^3$

$= 95,000 (1.1159)^3$

= 95,000 * 1.3897

= R132,018.40

$=R115,000+(R90,000*1.1159^1)+(R45,000*1.159^2)$

$=R115,000+R100,431+R112,070.95$

$FV= R 327,501.95$