What is the future value of the following cash flows at the end of year 3 if the interest rate is 6%? The cash flows occur at the end of each year.
A) $15,916.78
B) $18,109.08
C) $18,246.25
D) $19,341.02
E) $19,608.07

Question

What is the future value of the following cash flows at the end of year 3 if the interest rate is 6%? The cash flows occur at the end of each year. 
A) $15,916.78 
B) $18,109.08 
C) $18,246.25 
D) $19,341.02 
E) $19,608.07

Quizplus · Accepted Answer

Using the formula for future value of an annuity, we get:
FV = cash flow x [(1 + r) ^ n - 1] / r
FV = $5,000 x [(1 + 0.06) ^ 3 - 1] / 0.06
FV = $18,246.25
Therefore, the best choice is C.

What Is the Future Value of the Following Cash Flows