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KG has the following investment option to make series of unequal payment at the end of each year which altogether will mature after the tenth year.
Years Cashflows(Ghc)
1 3000
2 4000
3 5000
4 5000
Calculate the future values of the cashflows at the end of the tenth year if the interest rate is 18% per annum.
Note: Round your factors to four (4) decimal places and the final answer to two (2) decimal placesIt would be very surprising if this were to be asked in Paper FM, because it is a basic Paper MA question.
To get the future or terminal value, take each flow and multiply by (1+r)^n and then add them all together.
So for the first flow, there will be 9 years of interest so the future value will be 3,000 x (1.18^9).Although, again, this would be very very unlikely to be asked in Paper FM, do watch my free Paper MA (was F2) lectures on interest where all this is explained.
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