A firm makes investments of $2,000 this year, $4,000 next year, and $2,500 the following year. This form of cash flow pattern is a(n) _____.
A)ordinary annuity
B)annuity due
C)uneven cash flow stream
D)lump-sum payment
E)compounded cash flow

Question

A firm makes investments of $2,000 this year, $4,000 next year, and $2,500 the following year. This form of cash flow pattern is a(n) _____. 
A)ordinary annuity
B)annuity due
C)uneven cash flow stream
D)lump-sum payment
E)compounded cash flow

Quizplus · Accepted Answer

The cash flow pattern of the investment is uneven, as the investments are not made at equal intervals. An ordinary annuity would have equal payments made at equal intervals, and an annuity due would have payments made at the beginning of each period instead of the end. A lump-sum payment would involve a single payment at one point in time, and a compounded cash flow would involve interest being earned on a previous investment.

A Firm Makes Investments of $2,000 This Year, $4,000 Next