Moving Cash Flows What is the value in year 15 of a $600 cash flow made in year 3 when the interest rates are 4 percent?
A)$374.76
B)$888.00
C)$960.62
D)$1,080.57

Question

Quizplus · Accepted Answer

To move cash flows, we need to use the formula: Present Value = Future Value / (1+interest rate)^n
Where n is the number of years between the cash flows.
In this case, the future value is $600, the interest rate is 4%, and the number of years is 12 (from year 3 to year 15).
Plugging in the values, we get:
Present Value = $600 / (1+0.04)^12 = $374.76
Therefore, the value in year 15 of a $600 cash flow made in year 3 is $374.76. The closest answer choice is C: $960.62, which is our answer rounded to the nearest cent.

Moving Cash Flows What Is the Value in Year 15