8. Unevencash flowsA 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 thetime 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 Flows1$1,200,0002$3,650,000$5,750,000$4,400,000$3,800,000$4,500,0003456 The CFO of the company believes that an appropriate annual interest rate on this investment is 6%. What is the present value of this uneven cash flowstream (rounded to the nearest whole dollar)?$17,476,298$13,900,000$12,047,954$18,705,488Identify whether the situations described in the following table are examples of uneven cash flows or annuity payments.DescriptionTeresa bought a new dress for her brother's wedding for $450. She negotiated a deal with the retailer inwhich 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 for a lifetime subscription to your favoritemagazine.British consols are British government bonds that promise to make payments of a specified amount at regularintervals to the bearer forever.You receive interest earnings from variable deposits in a regular interest-bearing savings account.Uneven CashFlowsAnnuityPayments

The CFO of the company believes that an appropriate annual interest rate on this investment is 6%. What is the present value of this uneven cash flow stream (rounded to the nearest whole dollar)? O $17,476,298 $13,900,000 O $12,047,954 $18,705,488

The CFO of the company believes that an appropriate annual interest rate on this investment is 6%. What is the present value of this uneven cash flow stream (rounded to the nearest whole dollar)? O $17,476,298 $13,900,000 O $12,047,954 $18,705,488

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter3: International Financial Markets

Section: Chapter Questions

Problem 3BIC

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