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You are to receive a cash flow of $1,500 two years from now. Once received, you will invest the money and earn a 10.5% return. What is the value of the investment in year 5?

Respuesta :

Zviko

Answer:

$2,471.17

Explanation:

The value of the investment in 5 years time from the day of investment is known as the Future Value.

The Future Value is calculated by compounding the Principle Amount (amount invested) using the effective interest rate.

We can determine the Future Value using a Financial Calculator as follows :

PV = - $1,500

PMT = $0

P/YR = 1

N = 5

I = 10.5%

FV = ??

The Future Value (FV) is $2,471.17

Thus,

the value of the investment in year 5 is $2,471.17