8. Uneven cash flows A series, or stream, of cash flows may not always necessarily be an annuity. Cash flows can also be uneven and nonconstant, but the concept of the time value of money applies to uneven cash flows as well. Consider the following case: Swanky Beverage Co. expects the following cash flows from its manufacturing plant in Palau over the next years: Year Annual Cash Flows 1 $3,500,000 2 $4,700,000 $4,750,000 3 4 $6,800,000 The CFO of the company believes that an appropriate annual interest rate on this investment is 4.5%. What is the present value of this uneven cash flow stream (rounded to the nearest whole dollar)? O $29,300,000 $17,517,839 0 $16,670,451 O $18,256,148 9. Perpetuities Perpetuities are also called annuities with an extended, or unlimited, life. Based on your understanding of perpetuities, answer the following questions: Which of the following are characteristics of a perpetuity? Check all that apply. In a perpetuity, returns-in the form of a series of identical cash flows-are earned. O A perpetuity continues for a fixed time period. The principal amount of a perpetuity is repaid as a lump-sum amount. A perpetuity is a series of regularly timed, equal cash flows that is assumed to continue indefinitely into the future. A local bank's advertising reads: "Give us $35,000 today, and we'll pay you $2,400 every year forever." If you plan to live forever, what annual interest rate will you earn on your deposit? O 8.23% 10.98% 9.60% 6.86% Oops! When you went in to make your deposit, the bank representative said the amount of required deposit reported in the advertisement was incorrect and should have read $52,500. This revision will the interest rate earned on your deposited funds. The change to your required deposit will cause your earned interest rate to change to