Annuities and Perpetuities Quiz
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Questions and Answers

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?

  • 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?

  • It is zero.
  • It is equal to the future value.
  • It is infinite. (correct)
  • It cannot be calculated.

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