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Future Value of Multipk Cuish Flows Find the future value of a cash flow stron The Problem: Your rich cousin has promised to pay you $200 the end of every year for the next three years. You can invest all of the cash flows * 5%. What is this cash flow stron worth to you at the end of the third yek? Future Value The mount to which wash flow of of flows will grow over given period of time when compounded a given intaostot Hind: Unless told otherwise, assume that cash flows occur at the end of the period! Finance Conape: FV = |CPVAF]*(+r)^= Future Value of an annuity Future Value Payment (FV Annuity Interest Factor =C(+/-1971 Numerical Solution: FV, = 200 ((1+.05-1.05 FV, - 2000.157625/05 - 200 3.1525 FV, S 630.50 In Words: Three qual payments of $200 at the end of the next three years will be worth $630.50 at the end of the third year Spreadsheet Solution: Here we will find the future value of each cash flow and then sum them. Use formulas to find your answer by completing the FV Table: + Today 5% Year 3 5% Solution Year 5% 1 200 a Interest Rate b Time cCash Flow dFV interest factor e Future Value Year 2 5% 2 200 200 1 First, we must calculate the FV Interest Factor for each cash flow in rowd.FVIF {1+r) In cell F37 enter the formula = (1+F34)^2 and copy to cells G37 and 137 You must change the exponents in cells 37(D) and H37 (OL 2 Then, we find the FV of each cash flow in towe In cell F38 enter the PV fomula: CFFVIF - F37"F36 and copy to cells G35 and H38. 3 Lastly, we samt the FVs to get the FV of the annuity in cell B. In cell 138 cnter the formula sumF38:1138) 4 Your sewer should be: The Future Value of the cash flows is valued 5670.50 Interest PV PVCF FVCF MS eady + quizlet.com/205834333/finance-test-2-chapter-1 You D 51 52 Note Yuan danger of the inte Excel will tomatically recompute 53 54 Test your dills 55 S6 What is the Future Value if the interstate is 10967 57 Enter 10 for each interest rate w pud paste your wer hare, Reset the interest rate 58 Answer: 5662.00 59 50 51 52 54 Spreadsheet Solution with the Exed Wizard: 55 56 Today Year 1 Year 2 Ya 3 Inputs 7 a interest Rate 0.1 rate 10.1 8 b Time 3 npr 13 9 Cash Flow 100 100 pent-100 0 d Future Value 1 22 In this case the payments are all equal annuity) Use a negative sign to get a positive answa 1. Put the cursor on H70 and click the function wizard (.) click financial, scroll down to FV, and click OK 0.) is located on your standard menu bar. 100 2. The dialog box will appear. Enter 367 or. 10 or E67 for the rate. J68 or 3 for aper and J69 for pmt. Click OK. 3. At 10% interest, your answer should be $331.00 Lising the FY formula directly: Use the built-in Excel formula=FVrate, aper. pmt) Inputs: Tale nper pot payment 3 1. in dl H4 typeTVE 2. Thos dick on cell F6 or enter 0.10 and then a cena 3. Then put your cursoron al FS7.than a cena 4. Last, put your use on cells and the ending on the hit cler Your should be the same as with the wind Interest PV PVCF FVCF MS Heady + quizlet.com/205834333/finance-test-2-chapter-6... You will retire in 15 years and want 8 D E G LE CUTTICOOL WAVES MERCE 73 to FV, and click OK.(.) is located on your standard menu bar 74 2. The dialog box will appear. Enta J67 or 10 or E67 for the rate, J68 or 3 for ap: 25 and J69 for pat. Click OK 76 77 3. At 10% interest, your answer should be $331.00 78 39 80 Using the FY formula directly 81 82 Use the built-in Excel formula:=FV (rate, aper, pt) 83 84 85 Inputs: 86 rate 0.1 87 nper 3 88 pmt (payment) -100 89 90 1. In cell H84.type =EVE 91 2. Then click on cell F86 or cntar 0.10 and then a comma 92 3. Then put your cursor on cell F87, then a comma 4. Last, put your cursor on cell F88 and the ending parens, then hit enter 94 5. Your answer should be the same as with the wizard. 95 96 97 Test your skills: 98 99 What is the future value of 10 yearly payments of $5.000 at 5.5% interest? 100 101 You can use the wizard or you can enter inputs into the cells above 102 103 104 105 106 107 108 109 110 111 112 113 145 116 247 118 119 PM PVC FVCF MS Read Future Value of Multipk Cuish Flows Find the future value of a cash flow stron The Problem: Your rich cousin has promised to pay you $200 the end of every year for the next three years. You can invest all of the cash flows * 5%. What is this cash flow stron worth to you at the end of the third yek? Future Value The mount to which wash flow of of flows will grow over given period of time when compounded a given intaostot Hind: Unless told otherwise, assume that cash flows occur at the end of the period! Finance Conape: FV = |CPVAF]*(+r)^= Future Value of an annuity Future Value Payment (FV Annuity Interest Factor =C(+/-1971 Numerical Solution: FV, = 200 ((1+.05-1.05 FV, - 2000.157625/05 - 200 3.1525 FV, S 630.50 In Words: Three qual payments of $200 at the end of the next three years will be worth $630.50 at the end of the third year Spreadsheet Solution: Here we will find the future value of each cash flow and then sum them. Use formulas to find your answer by completing the FV Table: + Today 5% Year 3 5% Solution Year 5% 1 200 a Interest Rate b Time cCash Flow dFV interest factor e Future Value Year 2 5% 2 200 200 1 First, we must calculate the FV Interest Factor for each cash flow in rowd.FVIF {1+r) In cell F37 enter the formula = (1+F34)^2 and copy to cells G37 and 137 You must change the exponents in cells 37(D) and H37 (OL 2 Then, we find the FV of each cash flow in towe In cell F38 enter the PV fomula: CFFVIF - F37"F36 and copy to cells G35 and H38. 3 Lastly, we samt the FVs to get the FV of the annuity in cell B. In cell 138 cnter the formula sumF38:1138) 4 Your sewer should be: The Future Value of the cash flows is valued 5670.50 Interest PV PVCF FVCF MS eady + quizlet.com/205834333/finance-test-2-chapter-1 You D 51 52 Note Yuan danger of the inte Excel will tomatically recompute 53 54 Test your dills 55 S6 What is the Future Value if the interstate is 10967 57 Enter 10 for each interest rate w pud paste your wer hare, Reset the interest rate 58 Answer: 5662.00 59 50 51 52 54 Spreadsheet Solution with the Exed Wizard: 55 56 Today Year 1 Year 2 Ya 3 Inputs 7 a interest Rate 0.1 rate 10.1 8 b Time 3 npr 13 9 Cash Flow 100 100 pent-100 0 d Future Value 1 22 In this case the payments are all equal annuity) Use a negative sign to get a positive answa 1. Put the cursor on H70 and click the function wizard (.) click financial, scroll down to FV, and click OK 0.) is located on your standard menu bar. 100 2. The dialog box will appear. Enter 367 or. 10 or E67 for the rate. J68 or 3 for aper and J69 for pmt. Click OK. 3. At 10% interest, your answer should be $331.00 Lising the FY formula directly: Use the built-in Excel formula=FVrate, aper. pmt) Inputs: Tale nper pot payment 3 1. in dl H4 typeTVE 2. Thos dick on cell F6 or enter 0.10 and then a cena 3. Then put your cursoron al FS7.than a cena 4. Last, put your use on cells and the ending on the hit cler Your should be the same as with the wind Interest PV PVCF FVCF MS Heady + quizlet.com/205834333/finance-test-2-chapter-6... You will retire in 15 years and want 8 D E G LE CUTTICOOL WAVES MERCE 73 to FV, and click OK.(.) is located on your standard menu bar 74 2. The dialog box will appear. Enta J67 or 10 or E67 for the rate, J68 or 3 for ap: 25 and J69 for pat. Click OK 76 77 3. At 10% interest, your answer should be $331.00 78 39 80 Using the FY formula directly 81 82 Use the built-in Excel formula:=FV (rate, aper, pt) 83 84 85 Inputs: 86 rate 0.1 87 nper 3 88 pmt (payment) -100 89 90 1. In cell H84.type =EVE 91 2. Then click on cell F86 or cntar 0.10 and then a comma 92 3. Then put your cursor on cell F87, then a comma 4. Last, put your cursor on cell F88 and the ending parens, then hit enter 94 5. Your answer should be the same as with the wizard. 95 96 97 Test your skills: 98 99 What is the future value of 10 yearly payments of $5.000 at 5.5% interest? 100 101 You can use the wizard or you can enter inputs into the cells above 102 103 104 105 106 107 108 109 110 111 112 113 145 116 247 118 119 PM PVC FVCF MS Read