The time line below contains an annuity with cash flow at the end of each period....

Question

Question

The time line below contains an annuity with cash flow at the end of each period.

The periodic market interest rate is 12%.

From the perspective of a potential investor at time 0 (zero), what type of annuity is described in the time line?

_________________

_________________

Answer 1

Answer #1

Req a: It is Ordinary Annuity where the cash flows is due at the end of the each year.

Req b:

Answer 2

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