Question

The first cash flow at the end of Week 1 is $100, the second cash flow at the end of Month 2 is $100, and the third cash flow at the end of Year 3 is $100. This cash flow pattern is a(n) ______ type of cash flow.

Answer 1

This cash flow pattern is a(n) uneven type of cash flow.

Explanation:

Any range of cash flows that don’t agree to the description of an annuity is supposed to be an uneven cash flow stream. For case, a range such as $100, $100, $100 would be deemed an uneven cash flow stream. A large dimension of assets causes uneven or irregular cash flow, causing the method of their valuation cumbersome.

Principle of Value Additivity is very frequently valuable for explaining the estimation of the present or future value of uneven cash flow streams, especially if the cash flows follow some identifiable pattern (such as various progressive annuities).