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:

End-Of-Period Spreadsheet

A worksheet used in accounting to compile all balances from ledgers to draft trial balances, adjustments, and financial statements.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, resulting in net profit or loss.

Current Asset

Short-term assets such as cash, inventory, and receivables that are expected to be liquidated or turned into cash within a short period, typically within a year.

Property, Plant, And Equipment

Tangible assets used in a company's operations that have a useful life of more than one year.