8. Unevencash 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 6 years:

Year	Annual Cash Flows
1	$4,000,000
2	$4,400,000
3	$5,000,000
4	$5,000,000
5	$6,350,000
6	$3,500,000

The CFO of the company believes that an appropriate annual interest rate on this investment is 6.5%. What is the present value of this uneven cash flow stream (rounded to the nearest whole dollar)?

$16,409,158

$18,850,000

$22,694,442

$23,368,546

Identify whether the situations described in the following table are examples of uneven cash flows or annuity payments.

Description	Uneven Cash Flows	Annuity Payments
You recently moved to a new apartment and signed a contract to pay monthly rent to your landlord for a year.
SOE Corp. hires an average of 10 people every year and matches the contribution of each employee toward his or her retirement fund.
Franklinia Venture Capital (FVC) invested in a budding entrepreneurs restaurant. The restaurant owner promises to pay FVC 10% of the profit each month for the next 10 years.
You have committed to deposit $600 in a fixed interestbearing account every quarter for four years.