Question: Assuming equal time intervals between the payments and a constant rate of return, which of the following cash flow patterns represents an annuity? Year 1
Assuming equal time intervals between the payments and a constant rate of return, which of the following cash flow patterns represents an annuity?
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | ||||||||||||||||||
| A) | $ | 1,040 | $ | 1,040 | $ | 1,040 | $ | 1,040 | $ | 1,040 | $ | 1,040 | |||||||||||
| B) | $ | 560 | $ | 0 | $ | 560 | $ | 560 | $ | 560 | $ | 0 | |||||||||||
| C) | $ | 120 | $ | 220 | $ | 320 | $ | 420 | $ | 520 | $ | 620 | |||||||||||
Multiple Choice
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A
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B
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C
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Any of the answers can represent an annuity.
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