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]

Question

BlackTom AI · Accepted Answer

Question restatement: The table shows cash flows for Investment X and Investment Y across four years, asking to classify each as either unequal/annuity/other.

Option a: 'a. Unequal cash flow; Annuity' — This matches the data. Investment X pays 5,000, 7,000, 9,000, and 11,000 over years 1–4, which are not the same each year, so they are unequal cash flows. Investment Y pays a constant 5,000 every year, which is the defining feature of an annuity (a level series of payments over multiple periods).

Option b: 'b. Perpetuity; Unequal cash flow' — A perpetuity would require payments to continue indefinitely beyond the shown period; the table only shows four years, so calling Y a perpetuity is inappropriate. Also, X is unequal, but the pairing here mislabels Y as a perpetuity, making this option incorrect.

Option c: 'c. Annuity; Equal cash flow' — If X were an annuity, it would need equal payments each year; however, X increases from year to year, so it is not an annuity. Y may look like an annuity, but the first half of this option mismatches X’s characteristics, rendering the statement false.

Option d: 'd. Annuity; Unequal cash flow' — This would correctly describe X as an unequal cash flow but incorrectly label X as an annuity in the first part, and it also sets an incorrect pairing because Y is indeed an annuity (equal payments), not an unequal cash flow. The chronological pattern makes this option inconsistent with the data.

In summary, the only option that faithfully describes both investments according to the table is that Investment X has unequal cash flows and Investment Y has an annuity.

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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