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Questions and Answers
Which of the following is true about an ordinary annuity?
Which of the following is true about an ordinary annuity?
- The present value is always greater than the future value. (correct)
- The future value and the present value are unrelated.
- The future value is equal to the present value.
- The future value is always greater than the present value.
What is the main difference between an ordinary annuity and an annuity due?
What is the main difference between an ordinary annuity and an annuity due?
- The interest rate used to calculate the cash flows.
- The amount of the cash flows.
- The timing of the cash flows. (correct)
- There is no difference between them.
What is the present value of a perpetuity?
What is the present value of a perpetuity?
- It is zero.
- It is equal to the future value.
- It is infinite. (correct)
- It cannot be calculated.
