11.17 Solution to Another Uneven Cash Flow Practice Problem

Answers to questions:

1. No change. When dealing with nominal figures, the order of the cash flows is irrelevant.
2. Higher – when larger cash flows come in sooner there is less discounting of the greater numbers – PVs increase!
3. Higher – when larger cash flows come in sooner there is more compounding of the greater numbers – FVs increase!