Many financial decisions require the analysis of uneven, or nonconstant, cash flows. -Select-v stock dividends typically increase over time, and investments in capitalequipment almost always generate uneven cash flows. The term cash flow (CFt) denotes -Select- v cash flows, while payment (PMT) designates -Select- v cash flows coming atregular intervals.The present value of an uneven cash flow stream is the sum of the PVs of the individual cash flows. The equation is:CFtCF1CF2CFNPV =(1+ 1)'(1+ 1)?(1+1)Nt=1 (1+ I)Similarly, the future value of an uneven cash flow stream is the sum of the FVs of the individual cash flows. Many calculators have an NFV key that lets you obtain the FV.However, ifyour calculator doesn't have a net future value (NFV) key, you can calculate the NFV as follows:NFV = NPV x (1 + I)N.One can also find the interest rate of the uneven cash flow stream with a financial calculator and solving for the-Select-v using the -Select- v key.Quantitative Problem: You own a security with the cash flows shown below.124610390270300Ifyou require an annual return of 12%, what is the present value of this cash flow stream? Do not round intermediate calculations. Round your answer to the nearest cent.$

Year -1 Cash flow is 610 Year -2 Cash flow is 390 Year -3 Cash flow is 270 Year -4 Cash flow is 300…

Quantitative Problem: You own a security with the cash flows shown below. 1 3 610 390 270 300 If you require an annual return of 12%, what is the present value of this cash flow stream? Do not round intermediate calculations. Round your answer to the nearest cent.

Quantitative Problem: You own a security with the cash flows shown below. 1 3 610 390 270 300 If you require an annual return of 12%, what is the present value of this cash flow stream? Do not round intermediate calculations. Round your answer to the nearest cent.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter10: Auditing Cash, Marketable Securities, And Complex Financial Instruments

Section: Chapter Questions

Problem 19CYBK

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Question

Many financial decisions require the analysis of uneven, or nonconstant, cash flows. -Select-
v stock dividends typically increase over time, and investments in capital
equipment almost always generate uneven cash flows. The term cash flow (CFt) denotes -Select- v cash flows, while payment (PMT) designates -Select- v cash flows coming at
regular intervals.
The present value of an uneven cash flow stream is the sum of the PVs of the individual cash flows. The equation is:
CFt
CF1
CF2
CFN
PV =
(1+ 1)'
(1+ 1)?
(1+1)N
t=1 (1+ I)
Similarly, the future value of an uneven cash flow stream is the sum of the FVs of the individual cash flows. Many calculators have an NFV key that lets you obtain the FV.
However, if
your calculator doesn't have a net future value (NFV) key, you can calculate the NFV as follows:
NFV = NPV x (1 + I)N.
One can also find the interest rate of the uneven cash flow stream with a financial calculator and solving for the
-Select-
v using the -Select- v key.
Quantitative Problem: You own a security with the cash flows shown below.
1
2
4
610
390
270
300
If
you require an annual return of 12%, what is the present value of this cash flow stream? Do not round intermediate calculations. Round your answer to the nearest cent.
$

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