• The Luxury Company is an established Italian multinational automaker that has its main headquarters in Milan, Italy.
• It was founded by Alexander Williams and incorporated on October 19, 1919 and had ever since been selling automobiles and commercial vehicles under the Luxury brand to the world. The UAE has been Luxurys loyal customer since the 1980s.
• You work as a financial analyst and have recently been placed onto an assignment with the Luxury Company, which is currently evaluating a project named KOA with the following cash flows:

• The KOA project aims to further expand the firms presence in the MENA region and is expected to go on for 5 years.
• The applicable discount rate used by the Luxury Company is 12%.

1. Calculate the value of the cash flows presented in the table above in Year 0. (1 point)

2. Determine the value of the cash flows presented in the table above in Year 3. (1 point)

3. Estimate the value of the cash flows presented in the table above in Year 6. (1 point)

4. Justify whether the cash flows presented in the table above represent an annuity. (1 point)

Explain the concept of annuity and its application in financial management.

5. Outline the difference between ordinary annuity and annuity due. Provide a real-life example of each. (1 point)

Year Cash Flows 1 $ 50 2 $ 100 3 $ 150 4 $ 200 5 $ 250