Compute the Future Value Three Years from Now of the Following

question 8

Multiple Choice

Compute the future value three years from now of the following end-of-year cash flows growing at a rate of 6% per year. $$\begin{array} { | l | l | } \hline 1 & \$ 450 \\\hline 2 & \$ 400 \\\hline 3 & \$ 300 \\\hline\end{array}$$

• A) $1,357.00
• B) $1,032.41
• C) $1,220.38
• D) $1,229.61

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Definitions:

Hobby

An activity done regularly in one's leisure time for pleasure, not normally intended as a primary source of income.

Deductible

An expense that can be subtracted from gross income to reduce taxable income, thereby lowering the tax liability.

Trade Or Business

Engagements or activities conducted for the purpose of income or profit, characterized by continuity and regularity.

Mortgage Interest

The interest charged on a loan used to purchase a property, often tax-deductible for the borrower.