Ch $05-$ Assignment $-$ Time Value of Money

A series of cash flows may not always necessarily be an annuity. Cash flows can also be uneven and variable in amount, but the concept of the time

value of money will continue to apply.

Consider the following case:

The Purple Lion Beverage Company expects the following cash flows from its manufacturing plant in Palau over the next six years:

The CFO of the company believes that an appropriate annual interest rate on this investment is $9\%.$ What is the present value of this uneven cash flow

stream, rounded to the nearest whole dollar?

$$1,975,000$

$$1,395,097$

$$600,000$

$$1,775,000$

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