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Unformatted text preview: ash flows, specify the interest rate, and directly calculate the
future value of the entire cash flow stream. Had you used your calculator to find
the individual cash flow future values and then summed them, the future value of
Shrell Industries’ cash flow stream at the end of year 5 would have been
$83,608.15, a more precise value than the one obtained by using a financial table.
Spreadsheet Use The future value of the mixed stream also can be calculated as
shown on the following Excel spreadsheet. If Shrell Industries invests at 8% interest the cash flows received from its customer over the next 5 years, the company will accumulate about $83,600 by the
end of year 5. Present Value of a Mixed Stream
Finding the present value of a mixed stream of cash flows is similar to finding the
future value of a mixed stream. We determine the present value of each future
amount and then add all the individual present values together to find the total
EXAMPLE Frey Company, a shoe manufacturer, has been offered an opportunity to receive
the following mixed stream of...
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