Associate, Incorporated, has identified an investment project with the following cash flows.

Year	Cash Flow
1	$ 1,100
2	1,330
3	1,550
4	2,290
If the discount rate is 6 percent, what is the future value of these cash flows in Year 4?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.

If the discount rate is 14 percent, what is the future value of these cash flows in Year 4?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.

If the discount rate is 21 percent, what is the future value of these cash flows in Year 4?

To find the future value (FV) of the cash flows in Year 4 for different discount rates, we need to compound each cash flow to the fourth year. This can be done using the formula for the future value of a single cash flow:

\[
FV = CF \times (1 + r)^{(n-t)}
\]

Where:
- $CF$ is the cash flow for a specific year,
- $r$ is the discount rate (as a decimal),
- $n$ is the future year (in this case, Year 4),
- $t$ is the current year of the cash flow.

### Steps:
1. For each cash flow, apply the formula to bring it to Year 4.
2. Sum the future values of all cash flows.

Now, I will compute the future value of these cash flows for the three different discount rates: 6%, 14%, and 21%.

Let me calculate these values.The future value (FV) of the cash flows in Year 4 for the different discount rates are as follows:

1. At a 6% discount rate: **$6,737.51**
2. At a 14% discount rate: **$7,415.17**
3. At a 21% discount rate: **$8,061.47**

Would you like further clarification or details on any part of this calculation?

Here are 5 related questions to expand on this:

1. How do changes in the discount rate affect the future value of cash flows?
2. What would be the present value of these cash flows with the same discount rates?
3. How can we apply this future value approach to real-life investment decisions?
4. What is the difference between future value and net present value (NPV)?
5. How would this change if the cash flows occurred mid-year instead of at year-end?

**Tip:** Higher discount rates decrease the present value of future cash flows but increase their future value when compounding forward.

Learn how to calculate the future value of cash flows over four years with different discount rates (6%, 14%, and 21%). This example demonstrates compounding cash flows using the time value of money formula and is ideal for finance students.

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