There are two financial products. A will offer $100,000 in five years. B will offer $1,500 every month from now for five years. Product A is (single or multiple) cash flow(s)? $10... There are two financial products. A will offer $100,000 in five years. B will offer $1,500 every month from now for five years. Product A is (single or multiple) cash flow(s)? $100,000 is (present or future) value? Product B is (single or multiple) cash flow(s)? How many cash flow(s) in total?
Understand the Problem
This question is about identifying the nature of cash flows in two different financial products. It asks whether each product involves a single cash flow or multiple cash flows, and whether a specific amount is a present or future value. For product B, it also asks for the total number of cash flows.
Answer
Product A is a single cash flow; \$100,000 is a future value. Product B is multiple cash flows with 60 total cash flows.
Product A is a single cash flow, and $100,000 is a future value. Product B is multiple cash flows. There are 60 cash flows in total.
Answer for screen readers
Product A is a single cash flow, and $100,000 is a future value. Product B is multiple cash flows. There are 60 cash flows in total.
More Information
Product A involves a single payment, making it a single cash flow, and since it is paid in the future it is the future value. Product B involves multiple payments of $1,500 every month for five years, so you would have 1,500 payments * 12 months/year * 5 years = 60 total cashflows.
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