here 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. An annuity due is an annuity that makes a payment at the beginning of each period for a certain time period. Ordinary annuities make fixed payments at the beginning of each period for a certain time period. An annuity is a series of equal payments made at fixed intervals for a specified number of periods. An annuity due earns more interest than an ordinary annuity of equal time. Which of the following is an example of an annuity? A lump-sum payment made to a life insurance company that promises to make a series of equal payments later for some period of time An investment in a certificate of deposit (CD) 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 $1,900 every year and plans to renovate her kitchen. She deposits the money in her savings account at the end of each year and earns 12% 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 six years? a$13,106.03 b$17,269.12 c$7,811.67 d$15,418.86 If Katie deposits the money at the beginning of every year and everything else remains the same, she will save by the end of six years.
here 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. An annuity due is an annuity that makes a payment at the beginning of each period for a certain time period. Ordinary annuities make fixed payments at the beginning of each period for a certain time period. An annuity is a series of equal payments made at fixed intervals for a specified number of periods. An annuity due earns more interest than an ordinary annuity of equal time. Which of the following is an example of an annuity? A lump-sum payment made to a life insurance company that promises to make a series of equal payments later for some period of time An investment in a certificate of deposit (CD) 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 $1,900 every year and plans to renovate her kitchen. She deposits the money in her savings account at the end of each year and earns 12% 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 six years? a$13,106.03 b$17,269.12 c$7,811.67 d$15,418.86 If Katie deposits the money at the beginning of every year and everything else remains the same, she will save by the end of six 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.
An annuity due is an annuity that makes a payment at the beginning of each period for a certain time period.
Ordinary annuities make fixed payments at the beginning of each period for a certain time period.
An annuity is a series of equal payments made at fixed intervals for a specified number of periods.
An annuity due earns more interest than an ordinary annuity of equal time.
Which of the following is an example of an annuity?
A lump-sum payment made to a life insurance company that promises to make a series of equal payments later for some period of time
An investment in a certificate of deposit (CD)
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 $1,900 every year and plans to renovate her kitchen. She deposits the money in her savings account at the end of each year and earns 12% 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 six years?
a$13,106.03
b$17,269.12
c$7,811.67
d$15,418.86
If Katie deposits the money at the beginning of every year and everything else remains the same, she will save by the end of six years.
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