Christie, Incorporated, has identified an investment project with the following cash flows. What is the future value at an interest rate of 23 percent?

Year	Cash Flow
1	$ 960
2	1,190
3	1,410
4	2,150

To calculate the future value (FV) of the cash flows at an interest rate of 23%, we need to find the future value of each individual cash flow by compounding them to the end of year 4, and then sum them up.

The formula to calculate the future value of a single cash flow is:

\[
FV = PV \times (1 + r)^{n}
\]

Where:
- $ FV $ is the future value,
- $ PV $ is the present value (cash flow for a given year),
- $ r $ is the interest rate (in decimal form),
- $ n $ is the number of years until year 4.

Let’s calculate the future value for each cash flow:

1. **Year 1 cash flow ($960):** Compounded for 3 years (from year 1 to year 4).
\[
FV = 960 \times (1 + 0.23)^3
\]

2. **Year 2 cash flow ($1,190):** Compounded for 2 years (from year 2 to year 4).
\[
FV = 1,190 \times (1 + 0.23)^2
\]

3. **Year 3 cash flow ($1,410):** Compounded for 1 year (from year 3 to year 4).
\[
FV = 1,410 \times (1 + 0.23)^1
\]

4. **Year 4 cash flow ($2,150):** No compounding is needed since this is already in year 4.
\[
FV = 2,150
\]

I will now calculate the future value for each year and sum them up.The future value of the cash flows at an interest rate of 23% is approximately **$7,471.08**.

Would you like more details or have any questions about this calculation? Here are five related questions to expand your understanding:

1. How is the future value of cash flows affected by changes in the interest rate?
2. What is the difference between future value and present value?
3. How would you calculate the future value if the cash flows occurred at irregular intervals?
4. How can you determine the interest rate if you know the future and present values?
5. What are some real-world applications of calculating the future value of cash flows?

**Tip:** When dealing with compound interest, the more frequent the compounding, the greater the future value, especially over long time periods.

Learn how to calculate the future value of cash flows for an investment project using a 23% interest rate. This problem involves key concepts in finance, such as compound interest, future value of cash flows, and the time value of money. Detailed step-by-step solutions provided.

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