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Assignment Time value of Money Due Today at 11 PM PST A series of cash flows may not always necessarily be an annuity. Cash flows
Assignment Time value of Money Due Today at 11 PM PST A series of cash flows may not always necessarily be an annuity. Cash flows can also be uneven and variablein amount, but th oenaept cf the time value of money will continue to apply. Consider the following case: The Purple uon Beverage Company expects the following cash flows from its manufacturing plant in Palau over the next three Annual Cash Flows Year 1 Year 2 Year 3 $100,000 $37,500 $330,000 The CFO of the company believes that an appropriate annual interestrate on this investment is 4%. Whatis the present value of this uneven cash flow stream, rounded to the nearest whole dollar? $1.450,000 Q $424,194 OES,817,500 467,500 Identify whether the situations described in the following table are examples of uneven cash flows or annuity payments: Uneven Annuity Description Cash Flows Payments Shania bought a new dress for her brother's wedding for $450. She negotiated a deal with the retailer in which she would pay for the dress in three installments of $250, $100, and $100 over the next three months. You signed up to make a monthly payment of $10 for one year fora lifetime to subscription to your favorite magazine. British consols are British govemment bonds that promise to make payments of a specified amount at regular intervals to the bearer forever. You receive interest eamings from variable deposits in a regular interest-bearing savings account
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