Question

There are three categories of cash flows: single cash flows, also referred to as "lump sums," a stream of unequal cash flows, 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. When equal payments are made at the beginning of each period for a certain time period, they are treated as an annuity due When equal payments are made at the beginning of each period for a certain time period, they are treated as ordinary annuities. Annuities are structured to provide fixed payments for a fixed period of time. An ordinary annuity of equal time earns less interest than an annuity due. Which of the following is an example of an annuity? O Alump-sum payment made to a life Insurance company that promises to make a series of equal payments later for some period le O An Investment in a certificate of deposit (CD) Rina loves shopping for clothes, but considering the state of the economy, she has decided to start saving. At the end of each year, she will deposit $750 in her local bank, which pays her 7% annual interest. Rina decides that she will continue to do this for the next 2 years. Rina's savings are an example of an annuity. How much will she save by the end of 2 years, rounded to the nearest whole dollar? O $1,662 O $2,097 O $1,320 O $1,553 If Rina deposits the money at the beginning of every year and everything else remains the same, she will save by the end of 2 years?

Answer 1

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