Question
In: Finance
An ordinary annuity is characterised by: a. a series of cash flows that are identical in...
An ordinary annuity is characterised by:
| a. |
a series of cash flows that are identical in amount and occur at the end of consecutive time periods over a finite period of time. |
|
| b. |
a series of cash flows that are identical in amount and occur at the start of consecutive time periods over a finite period of time. |
|
| c. |
None of the answers are correct. |
|
| d. |
a series of cash flows that are identical in amount and occur at the end of consecutive time periods over an infinite period of time. |
|
| e. |
a series of cash flows that grow at a constant rate and occur at the end of consecutive time periods over an infinite period of time. |
Solutions
Expert Solution
Option A is correct
a series of cash flows that are identical in amount and occur at the end of consecutive time periods over a finite period of time.
In an ordinary annuity, payment is made at the end of period and for a finite time, infinite payments are made in perpetuity
jeff jeffy answered 3 years agoRelated Solutions
An ordinary annuity is characterised by: a. a series of cash flows that are identical in...
An ordinary annuity is characterised by:
a. a series of cash flows that are identical in amount and occur
at the end of consecutive time periods over an infinite period of
time.
b. None of the answers are correct.
c. a series of cash flows that grow at a constant rate and occur
at the end of consecutive time periods over an infinite period of
time.
d. a series of cash flows that are identical in amount and occur
at...
16. Uneven cash flows A series of cash flows may not always necessarily be an annuity....
16. Uneven cash flows
A series of cash flows may not always necessarily be an annuity.
Cash flows can also be uneven and variable in amount, but the
concept of the time value of money will continue to apply.
Consider the following case:
The Purple Lion Beverage Company expects the following cash
flows from its manufacturing plant in Palau over the next five
years:
Annual Cash Flows
Year 1
Year 2
Year 3
Year 4
Year 5
$250,000
$37,500
$180,000...
1) A series of cash flows may not always necessarily be an annuity. Cash flows can...
1) A series of cash flows may not always necessarily be an
annuity. Cash flows can also be uneven and variable in amount, but
the concept of the time value of money will continue to apply.
Consider the following case:
The Purple Lion Beverage Company expects the following cash
flows from its manufacturing plant in Palau over the next five
years:
Annual Cash Flows
Year 1
Year 2
Year 3
Year 4
Year 5
$100,000
$20,000
$480,000
$450,000
$550,000
The...
A series of cash flows may not always necessarily be an annuity. Cash flows can also...
A series of cash flows may not always necessarily be an annuity.
Cash flows can also be uneven and variable in amount, but the
concept of the time value of money will continue to apply.
Consider the following case:
The Purple Lion Beverage Company expects the following cash
flows from its manufacturing plant in Palau over the next six
years:
Annual Cash Flows
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
$400,000
$37,500
$480,000
$450,000
$550,000...
16. Uneven cash flows A series of cash flows may not always necessarily be an annuity....
16. Uneven cash flows
A series of cash flows may not always necessarily be an annuity.
Cash flows can also be uneven and variable in amount, but the
concept of the time value of money will continue to apply.
Consider the following case:
The Purple Lion Beverage Company expects the following cash
flows from its manufacturing plant in Palau over the next five
years:
Annual Cash Flows
Year 1
Year 2
Year 3
Year 4
Year 5
$250,000
$37,500
$180,000...
Consider an ordinary annuity with growing cash flows. The annuity’s first cash flow is given by...
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1.An annuity due is a series of equal cash flows where a cash flow occurs at...
1.An annuity due is a series of equal cash flows where a cash
flow occurs at the end of each period.
True or False
2.The effective annual rate (EAR) will equal the annual
percentage rate (APR) if interest is compounded annually.
True or Flase
An annuity is a series of equal-sized cash flows occurring over equal intervals of time. An...
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1) The first cash flow of an annuity due is made on the first
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