Investment X is an example of a_________ cash flow and Investment Y is an example of ________ cash flow [table]
Year | Investment X | Investment Y
1 | $5 000 | $11 000 2 | $5 000 | $9 000 3 | $5 000 | $7 000 4 | $5 000 | $5 000
[/table]

Question

BlackTom AI · Accepted Answer

First, restating the question to ensure understanding: we have two investments across four years. Investment X pays 5000 every year for four years, while Investment Y pays 11,000 in year 1, 9,000 in year 2, 7,000 in year 3, and 5,000 in year 4. We must classify each as either an annuity, a perpetuity, a uniform or unequal cash flow, and so on.
Option a: 'Unequal cash flow; Annuity'. If X were an annuity, it would need to have equal payments over time, which it does (5000 each year). Therefore labeling X as unequal cash flow is incorrect. Additionally, stating Y as an annuity would require equal payments for multiple periods, which Y does not have, so this option misclassifies both investments.
Option b: 'Perpetuity; Unequal cash flow'. A perpetuity implies infinite, never-ending payments, which is not the case here since both investments stop after four years. Calling X an unequal cash flow is also inaccurate since its payments are perfectly equal. This makes this option false.
Option c: 'Annuity; Equal cash flow'. This correctly identifies X as an annuity, since it provides a fixed payment of 5000 each year. However, it claims Y has equal cash flows, which is incorrect because Y’s payments decline by 2000 each year (11,000; 9,000; 7,000; 5,000), so they are not equal across periods.
Option d: 'Annuity; Unequal cash flow'. This option correctly classifies X as an annuity (equal payments over four years) and Y as a cash flow that varies year to year (11,000, 9,000, 7,000, 5,000), i.e., unequal cash flows. The pairings align with the data given in the table.
In summary, the incorrect options fail due to mislabeling one or both investments: either misidentifying equal vs unequal payments, or mischaracterizing the nature of the payments over time. The only option that accurately matches the observed payment patterns for both investments is option d.}

MCD2170 - T1 - 2025 Key Concept 1 Video quiz

Investment X is an example of a_ cash flow and Investment Y is an example of cash flow [table] Year | Investment X | Investment Y 1 | $5 000 | $11 000 2 | $5 000 | $9 000 3 | $5 000 | $7 000 4 | $5 000 | $5 000 [/table]

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MCD2170 - T1 - 2025 Key Concept 1 Video quiz

Investment X is an example of a_________ cash flow and Investment Y is an example of ________ cash flow [table] Year | Investment X | Investment Y 1 | $5 000 | $11 000 2 | $5 000 | $9 000 3 | $5 000 | $7 000 4 | $5 000 | $5 000 [/table]

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Similar Questions

Investment X is an example of a_________ cash flow and Investment Y is an example of ________ cash flow [table] Year | Investment X | Investment Y 1 | $5 000 | $5 000 2 | $7 000 | $5 000 3 | $9 000 | $5 000 4 | $11 000 | $5 000 [/table]

Investment X is an example of a_________ cash flow and Investment Y is an example of ________ cash flow [table] Year | Investment X | Investment Y 1 | $5 000 | $5 000 2 | $7 000 | $5 000 3 | $9 000 | $5 000 4 | $11 000 | $5 000 [/table]

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In a consumer society, many adults channel creativity into buying things

Economic stress and unpredictable times have resulted in a booming industry for self-help products

People born without creativity never can develop it

A product has a selling price of $20, a contribution margin ratio of 40% and fixed cost of $120,000. To make a profit of $30,000. The number of units that must be sold is: Type the number without $ and a comma. Eg: 20000

Which of the following statement regarding cost is correct:

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