Which of the following statements about annuities are true? Check all that apply. A perpetuity is a constant, infinite stream of equal cash flows that can be thought of as an infinite annuity. Ordinary annuities make fixed payments at the end of each period for a certain time period. An annuity due is an annuity that makes a payment at the end of each period for a certain time period. An annuity due earns more interest than an ordinary annuity of equal time. Which of the following is an example of an annuity? A fund that invests in technology companies and distributes quarterly dividends for two out of four quarters per year but not always the same quarters A retirement fund set up to pay a series of regular payments Katie had a high monthly food bill before she decided to cook at home every day in order to reduce her expenses. She starts to save $1,410 every year and plans to renovate her kitchen. She deposits the money in her savings account at the end of each year and earns 5% annual interest. Katie’s savings are an example of an annuity. If Katie decides to renovate her kitchen, how much would she have in her savings account at the end of eight years? $9,113.13 $14,137.46 $11,444.60 $13,464.24 If Katie deposits the money at the beginning of every year and everything else remains the same, she will save by the end of eight years.
Which of the following statements about annuities are true? Check all that apply. A perpetuity is a constant, infinite stream of equal cash flows that can be thought of as an infinite annuity. Ordinary annuities make fixed payments at the end of each period for a certain time period. An annuity due is an annuity that makes a payment at the end of each period for a certain time period. An annuity due earns more interest than an ordinary annuity of equal time. Which of the following is an example of an annuity? A fund that invests in technology companies and distributes quarterly dividends for two out of four quarters per year but not always the same quarters A retirement fund set up to pay a series of regular payments Katie had a high monthly food bill before she decided to cook at home every day in order to reduce her expenses. She starts to save $1,410 every year and plans to renovate her kitchen. She deposits the money in her savings account at the end of each year and earns 5% annual interest. Katie’s savings are an example of an annuity. If Katie decides to renovate her kitchen, how much would she have in her savings account at the end of eight years? $9,113.13 $14,137.46 $11,444.60 $13,464.24 If Katie deposits the money at the beginning of every year and everything else remains the same, she will save by the end of eight years.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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7. Future value of annuities
There are two categories of cash flows: single cash flows, referred to as “lump sums,” and annuities. Based on your understanding of annuities, answer the following questions.
Which of the following statements about annuities are true? Check all that apply.
A perpetuity is a constant, infinite stream of equal cash flows that can be thought of as an infinite annuity .
Ordinary annuities make fixed payments at the end of each period for a certain time period.
An annuity due is an annuity that makes a payment at the end of each period for a certain time period.
An annuity due earns more interest than an ordinary annuity of equal time.
Which of the following is an example of an annuity?
A fund that invests in technology companies and distributes quarterly dividends for two out of four quarters per year but not always the same quarters
A retirement fund set up to pay a series of regular payments
Katie had a high monthly food bill before she decided to cook at home every day in order to reduce her expenses. She starts to save $1,410 every year and plans to renovate her kitchen. She deposits the money in her savings account at the end of each year and earns 5% annual interest. Katie’s savings are an example of an annuity. If Katie decides to renovate her kitchen, how much would she have in her savings account at the end of eight years?
$9,113.13
$14,137.46
$11,444.60
$13,464.24
If Katie deposits the money at the beginning of every year and everything else remains the same, she will save by the end of eight years.
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