Answer to Question #221639 in Financial Math for sosi donda

Question #221639

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?


1
Expert's answer
2021-08-02T16:15:15-0400

The future value is calculated using the formula;


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

=95,000(1.1159)3= 95,000 (1.1159)^3

= 95,000 * 1.3897

= R132,018.40

=R115,000+(R90,0001.11591)+(R45,0001.1592)=R115,000+(R90,000*1.1159^1)+(R45,000*1.159^2)

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

FV=R327,501.95FV= R 327,501.95



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