Many financial decisions require the analysis of uneven, or non constant, cash flows. -Select-Preferred Common Correct 1 of Item 1 stock dividends typically increase over time, and investments in capital equipment almost always generate uneven cash flows. The term cash flow (CF_t) denotes -Select-equal uneven Correct 2 of Item 1 cash flows, while payment (PMT) designates -Select-equal uneven Correct 3 of Item 1 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:

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 × (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-net of future value (NFV)internal rate of return (IRR)net of present value (NPV)Correct 4 of Item 1 using the -Select-NFV IRR NPV Correct 5 of Item 1 key.

Quantitative Problem: You own a security with the cash flows shown below.

0

1

2

3

4

0

660

355

250

340

If you require an annual return of 10%, what is the present value of this cash flow stream? Do not round intermediate calculations. Round your answer to the nearest cent.
$

Answer rating: 100% (QA)

Solution Given data Time value Money Unellen Many financial decisions require analysis of PV stock duldends typically increase investments in capital almost always generate unellen time calculate CF 1... View the full answer