Which of the following statement is true? a) An ordinary annuity is an annuity in which the cash flow occurs at the start of each period b) None of the above c) A deferred annuity is an annuity in which the first cash flow occurs at the end of the time period between each subsequent cash flow d) with a credit foncier loan ( a loan for a fixed period with regular repayments) as time passes a smaller proportion of each repayment goes to paying off the interest on the loan

Which of the following statement is true? a) An ordinary annuity is an annuity in which the cash flow occurs at the start of each period b) None of the above c) A deferred annuity is an annuity in which the first cash flow occurs at the end of the time period between each subsequent cash flow d) with a credit foncier loan ( a loan for a fixed period with regular repayments) as time passes a smaller proportion of each repayment goes to paying off the interest on the loan

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 10QTD

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Which of the following statements is CORRECT? The cash flows for an annuity may vary from period to period, but they must occur at regular intervals, such as once a year. The cash flows for an annuity due must all occur at the beginning of the periods. The cash flows for an ordinary annuity occur at the beginning of the periods. If some cash flows occur at the beginning of the periods while others occur at the ends, then we have what the textbook defines as an ordinary annuity. If a series of unequal cash flows occurs at regular intervals, such as once a year, then the series is by definition an annuity.
Which of the following statements is CORRECT? If some cash flows occur at the beginning of the periods while others occur at the ends, then we have what the textbook defines as a variable annuity. The cash flows for an ordinary (or deferred) annuity all occur at the beginning of the periods. If a series of unequal cash flows occurs at regular intervals, such as once a year, then the series is by definition an annuity. The cash flows for an annuity due must all occur at the ends of the periods. The cash flows for an annuity must all be equal, and they must occur at regular intervals, such as once a year or once a month.
1. Which statement is FALSE? A. Future value annuity is an example of annuity. B. A perpetuity is an annuity that has maturity period. C. An annuity is a series of equal payment made for a specified number of years. D. Ordinary annuity is an annuity in which the cash flows occur at the end of each period.
Which of the following statements about annuities are true? Check all that apply. An ordinary annuity of equal time earns less interest than an annuity due. A perpetuity is a series of equal payments made at fixed intervals that continue infinitely and can be thought of as an infinite annuity. When equal payments are made at the end of each period for a certain time period, they are treated as ordinary annuities. When equal payments are made at the end of each period for a certain time period, they are treated as an annuity due.
Which of the following is false? The future value of a deferred annuity is equal to the future value of an annuity not deferred. If the first payment is received at the end of the fifth period, it means the ordinary annuity is deferred for five periods. The present value of a deferred annuity is less than the present value of an annuity not deferred. To calculate the present value of a deferred annuity, determine the present value of an ordinary annuity for the entire period and subtract the present value of the payments which were not received during the deferral period.
Which of the following statements is CORRECT? 1. If some cash flows occur at the beginning of the periods while others occur at the ends, then we have what the textbook defines as a variable annuity. 2. The cash flows for an annuity must all be equal, and they must occur at regular intervals, such as once a year or once a month. 3. If a series of unequal cash flows occurs at regular intervals, such as once a year, then the series is by definition an annuity. 4. The cash flows for an annuity due must all occur at the ends of the periods. 5. The cash flows for an ordinary (or deferred) annuity all occur at the beginning of the periods.
Perpetuity is a type of annuity which has infinite period of payments. The present value of a perpetuity equals to the annual payment divided by the required rate of return. True or False
With a deferred ordinary annuity, the first payment was made one or more periods prior. the first payment begins one or more periods later. the last payment is made first. the first payment is made last.
An annuity in which the first cash flow occurs at the beginning of the period is called a/an: Oordinary perpetuity. growth annuity. Oordinary annuity. annuity due.
Using an annuity, you may calculate the present value of a single payment or a series of payments you will receive. Is this statement correct or incorrect?
The future value of an annuity due is determined one period after the first cash flow in the series. a.True b.False
Annuity due is an annuity whose payment is due at the END of each period. TRUE OR FALSE?