What is the value in year 10 of a $1,000 cash flow made in year 5 if interest rates are 9% in years 6 and 7 and increase to 13% in the remaining years?
A) $1,538.62
B) $1,691.47
C) $1,714.31
D) $1,799.42

Question

Quizplus · Accepted Answer

To find the future value of the cash flow, calculate the compound interest for each period. From year 5 to year 7, the interest rate is 9%, and from year 8 to year 10, it is 13%. The calculation is: $1,000 * (1.09)^2 * (1.13)^3 = $1,714.31.

What Is the Value in Year 10 of a $1,000