Question

Required information The annual revenues associated with several large apartment complexes are $250, $250 $300, $400, S100, and $150 for years 0. 1. 2. 3. 4, and 5, respectively. Determine the cumulative cash flow and whether each cash flow series is conventional or nonconventional. The costs for years 0, 1, 2, 3, 4, and 5. respectively, are provided in the problems. When the cash flow is zero, assume it to be negative. Year Cost.$ 0 1500 -450 -300 -500 -200 -400 The cash flow is (Click to select) The Cumulative cash flow is Year 012 Cumulative r

Answer 1

The cash flow is nonconventional.

A conventional project will have a negative cash flow in year 0, followed by a series of positive cash flows in subsequent years. In this case the cash flo in year 1 is positive and the cash flows in subsequent years are negative. Hence, the series of cash flows is nonconventional.

The cumulative cash flows: The last row in the table below contains your answers.

Please see the table below. Please be guided by the second column titled “Linkage” to understand the mathematics. The last row highlighted in yellow is your answer. Figures in parenthesis, if any, mean negative values. All financials are in $.

Year	Linkage	0	1	2	3	4	5
Revenues	A	250	250	300	400	100	150
Costs	B	1,500	(450)	(300)	(500)	(200)	(400)
Cash flows	C = A + B	1,750	(200)	-	(100)	(100)	(250)
Cumulative Cash flows	D = Cumulative C	1,750	1,550	1,550	1,450	1,350	1,100