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- September 13, 2021 at 1:05 am #635618
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 placesSeptember 13, 2021 at 9:41 am #635642It 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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