1. When working with a series of annual cash flows and calculating the future or present value, we have to forward or discount the annual cash flows before we add them together, but we can safely add cash flows within each year to arrive at each annual cash flow.
A. True
B. False
2. Assume you expect to receive $400 in year 1, $500 in year 2, and $ 400 in year 3. What is the present value of this series of cash flows, assuming 3% annual rate of interest?