Time line for:

Fig1: A lump sum cash flow at the end of Year 2.

0   100    
0   2    

  1    

Fig2: An ordinary annuity if $100 per year for 3 years.

   

0   100  

0   2    

  1   3  

100   100  

-50   75    
0   2    

  1   3  
  100   50  
Fig3: An uneven cash flow stream.

b(1).FV=PV(1+i)n

=100(1+.10)3
=
$133.1

(2) FV=PV (1+i) n

100 =PV (1+.10)3

 PV=$75.13

C) i=20%,now PV=100 FV=200

200=100(FVIFAi,n)

2=FVIFA20%,n

So, n=4

d(1) Ordinary annuity- An annuity in which the payments occur at the end of each period.

Timeline:

0   100    
0   2    

  1   3  
  100   100  

Annuity due- An annuity in which the payments occur at the beginning of each period.

Timeline:  

100   100    
0   2    

  1   3  
  100   100  

 The type of the annuity can be changed by changing the payment procedure. Payment is to be
done at the beginning of each period.