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Unformatted text preview: e date. Examples include $1,000 today and $650 to be received at
the end of 10 years.
Annuity: A level periodic stream of cash flow. For our purposes, we’ll work
primarily with annual cash flows. Examples include either paying out or
receiving $800 at the end of each of the next 7 years.
Mixed stream: A stream of cash flow that is not an annuity; a stream of
unequal periodic cash flows that reflect no particular pattern. Examples
include the following two cash flow streams A and B. CHAPTER 4 Time Value of Money 135 Mixed cash flow stream
End of year A B 1 $ 100 $ 50 2 800 100 3 1,200 80 4 1,200 60 5 1,400 6 300 Note that neither cash flow stream has equal, periodic cash flows and that A
is a 6-year mixed stream and B is a 4-year mixed stream.
In the next three sections of this chapter, we develop the concepts and techniques for finding future and present values of single amounts, annuities, and
mixed streams, respectively. Detailed demonstrations of these cash flow patterns
are included. Review Quest...
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