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 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. Ordinary annuities make fixed payments at the beginning of each period for a certain time period. An annuity due is an annuity that makes a payment at the beginning of each period for a certain time period. Which of the following is an example of an annuity? O An investment in a certificate of deposit (CD) OA lump-sum payment made to a life insurance company that promises to make a series of equal payments later for some period of time
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 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. Ordinary annuities make fixed payments at the beginning of each period for a certain time period. An annuity due is an annuity that makes a payment at the beginning of each period for a certain time period. Which of the following is an example of an annuity? O An investment in a certificate of deposit (CD) OA lump-sum payment made to a life insurance company that promises to make a series of equal payments later for some period of time
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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Transcribed Image Text: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.
O 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.
□ Ordinary annuities make fixed payments at the beginning of each period for a certain time period.
An annuity due is an annuity that makes a payment at the beginning of each period for a certain time period.
Which of the following is an example of an annuity?
O An investment in a certificate of deposit (CD)
O 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
Transcribed Image Text:Ashley has a large and growing collection of animated movies. She wants to replace her old television with a new LCD model, so she has started
saving for it. At the end of each year, she deposits $1,620 in her bank account, which pays her 10% interest annually. Ashley wants to keep saving for
two years and then buy the newest LCD model that is available. Ashley's savings are an example of an annuity. How much money will Ashley have to
buy a new LCD TV at the end of two years?
O $3,402.00
$2,891.70
O $3,742.20
O $2,811.57
If Ashley deposits the money at the beginning of every year and everything else remains the same, she will save
years.
by the end of two
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