$100 is received at the beginning of year 1, $200 is received at the beginning of year 2, and $300 is received at the beginning of year 3. If these cash flows are deposited at 12 percent, their combined future value at the end of year 3 is ________ .
A) $ 727
B) $1,536
C) $1,245
D) $ 672

Question

Quizplus · Accepted Answer

The future value of the cash flows can be calculated using the formula:FV = PV * (1 + r)^nwhere:FV is the future valuePV is the present valuer is the interest raten is the number of yearsIn this case, the present value of the cash flows is $100 + $200 + $300 = $600. The interest rate is 12% and the number of years is 3. Therefore, the future value of the cash flows is:FV = $600 * (1 + 0.12)^3 = $727.20

$100 Is Received at the Beginning of Year 1, $200