question archive Consider the following timeline: Date $500 Cash flow If the current market rate of interest is 10%, then the future value of this timeline is closest to A) $500 O B) $605 09 $666 D) $650 E) $9999
Consider the following timeline: Date $500 Cash flow If the current market rate of interest is 10%, then the future value of this timeline is closest to A) $500 O B) $605 09 $666 D) $650 E) $9999
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Consider the following timeline: Date $500 Cash flow If the current market rate of interest is 10%, then the future value of this timeline is closest to A) $500 O B) $605 09 $666 D) $650 E) $9999
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Ans. c.) If the current market rate of interest is 10%, then the future value of this timeline is closest to: $666
Cash flow at year 0 = $500
Rate of interest = 10%
N= 3 years
Value of cash flow at year 3 = Cash flow at year 0*(1+Rate of interest)^N
= 500*(1+10%)^3 = 500*(1.10)^3 = $665.5
Since, the future value of the cash flow is $665.5, is it closest to the option c that is $666
