Answer:
$4,551,701
Explanation:
Global Shippers Inc. has forecast earnings of $1,233,600, $1,345,900, and $1,455,650 for the next three years. The future value of these will be $4,551,701 earnings if the firm's opportunity cost is 13 percent.
Answer:
Explanation:
Given:
Annuity amount in year 1, A1 = $1,233,600
Annuity amount in year 2, A2 = $1,345,900
Annuity amount in year 3, A3 = $1,455,650
Rate, r = 13%
The equation for the future value of an ordinary annuity is the sum of the geometric sequence:
Future value, FV = A(1 + r)^0 + A(1 + r)^1 + ...+ A(1 + r)^n-1
FVOA = A3(1 + r)^0 + A2(1 + r)^1 + A1(1 + r)^2
Inputting values,
= $1,233,600 × 1.13^2 + $1,345,900 × 1.13^1 + $1,455,650 × 1.13^0
= $4551700.84
= $4551701
