Suppose That You Want to Evaluate the Following Non-Standard Cash

question 27

Multiple Choice

Suppose that you want to evaluate the following non-standard cash flow: $1 000 paid at the end of every third year in a 12-year period with annual interest rate of 10%. What is the best method?

• A)Convert the non-standard cash flow into standard annuity by changing the interest rate.
• B)Convert the non-standard cash flow into standard annuity by changing the compounding period.
• C)Convert the non-standard cash flow into arithmetic gradient series.
• D)Treat each payment as a separate payment.
• E)Convert the non-standard cash flow into a geometric gradient series.

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Definitions:

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