Examples include 1000 today and 650 to be received at

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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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This document was uploaded on 03/03/2014 for the course MBA BMMF at Open University Malaysia.

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