## Question

###### 10. Uneven cash flows A Aa E A series of cash flows may concept of the...

10. Uneven cash flows A Aa E A series of cash flows may concept of the time valu s necessarily be an annuity. Cash flows can also be uneven and variable in amount, but the Il 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: Year 1 Year 2 Annual Cash Flows Year 4 $180,000 $450,000 Year 3 Year 6 $375,000 $750,000 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 streant, rounded to the nearest whole dollar? $1,571,023 $467,500 0 $1,825,000 0 $2,042,500 Tari hether the situations described in the following table are examples of uneven cash flows or annuity payments

Identify whether the situations described in the following table are examples of uneven cash flows or annuity payments: Uneven Cash Flows Annuity Payments Description Debbie has been donating 10% of her salary at the end of every year to charity for the last three years. Her salary increased by 15% every year in the last three years. You deposit a certain equal amount of money every year into your pension fund. Amit receives quarterly dividends from his investment in a high-dividend yield, index exchange-traded fund. Aakash borrowed some money from his friend to start a new business. He promises to pay his friend $2,650 every year for the next five years to pay off his loan along with interest. oooo ooo

Assignment 05 - Time Value of Money affects both the present and future values of cash flows. An investor can invest money with a particular bank and earn a stated interest rate of 6.60%; however, interest will be compounded quarterly. What are the nominal, periodic, and effective interest rates for this investment opportunity? Interest Rates Nominal rate Periodic rate Effective annual rate You want to invest $18,000 and are looking for safe investment options. Your bank is offering you a certificate of deposit that pays a nominal rate of 6% that is compounded monthly. What is the effective rate of return that you will earn from this investment? 06.345% 06.168% O 6.253% O 6.482% Suppose you decide to deposit $18,000 in a savings account that pays a nominal rate of 16%, but interest is compounded daily. Based on a 365-day year, how much would you have in the account after 12 months? (Hint: To Calculate the number of days, divide the number of months by 12 and multiply by 365.) $21,122:45 $21,544.90 $20,700.00 $20,911.23

## Answers

In case of multiple questions, as a rule, a maximum of One (1) question can only be answered. Further, if no specific question is requested (maximum of 1), the first question is itself only answered.

Kindly post the remaining questions individually separately.Q Purple Lion Beverage Company, Present value of uneven cash flow

Most Appropriate response: (a) $1,571,023

Working:

Year Cash Flow Present Vaalue @ 6.5% Present Value of Cash flow 1 250000 0.9390 234742 2 37500 0.8817 33062 3 180000 0.8278 149013 4 450000 0.7773 349795 5 750000 0.7299 547411 6 375000 0.6853 257000 Total1571023

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