Table 10.2
-The cash flow pattern depicted is associated with a capital investment and may be characterized as ________. (See Table 10.2)
A) an annuity and conventional cash flow
B) a mixed stream and non-conventional cash flow
C) an annuity and non-conventional cash flow
D) a mixed stream and conventional cash flow

Question

Table 10.2 
-The cash flow pattern depicted is associated with a capital investment and may be characterized as ________. (See Table 10.2)
A) an annuity and conventional cash flow 
B) a mixed stream and non-conventional cash flow 
C) an annuity and non-conventional cash flow 
D) a mixed stream and conventional cash flow

Quizplus · Accepted Answer

Based on the given table, the cash flow pattern shows both positive and negative cash flows and therefore, can be classified as a mixed stream. Additionally, the cash flows occur at uneven intervals, which is typical of non-conventional cash flows. However, the cash flows follow a pattern consistent with a capital investment where there is an initial negative cash flow (year 0) followed by positive cash flows (years 1-5). This pattern indicates a conventional cash flow. Therefore, the best choice would be D, a mixed stream and conventional cash flow.

Table 10.2 -The Cash Flow Pattern Depicted Is Associated with a Capital