Ask Question
BusinessBusiness
15 January, 15:51

Which one of the following statements related to annuities and perpetuities is correct? Multiple Choice An ordinary annuity is worth more than an annuity due given equal annual cash flows for 10 years at 7 percent interest, compounded annually. A perpetuity comprised of $100 monthly payments is worth more than an annuity of $100 monthly payments provided the discount rates are equal. Most loans are a form of a perpetuity. The present value of a perpetuity cannot be computed but the future value can. Perpetuities are finite but annuities are not.

+2
Answers (1)
  1. 15 January, 19:36
    0
    A perpetuity comprised of $100 monthly payments is worth more than an annuity of $100 monthly payments provided the discount rates are equal.

    Explanation:

    There is the basic difference of time duration in the payments. Under perpetuity the payments are for an unlimited period, and under annuity the period is defined.

    As the payments are indefinite in perpetuity the amount will be higher in comparison to a limited period payments under annuity, also provided the interest rate is same for both.

    Thus, the chosen statement is correct.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Which one of the following statements related to annuities and perpetuities is correct? Multiple Choice An ordinary annuity is worth more ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
As the number of urban areas grew in the state in the late nineteenth and early twentieth centuries, the management of local affairs became such a growing burden on the state legislature that it passed the
Answers (1)
The state of Arizona mandates emissions testing for cars before drivers can obtain updated registrations. The state hires a contractor to conduct the emissions tests in the various emissions-testing facilities around the state.
Answers (1)
Beranek Corp has $855,000 of assets (which equal total invested capital), and it uses no debt-it is financed only with common equity.
Answers (1)
What does it mean to use diverse marketing strategies?
Answers (1)
Montana Mining Co. (MMC) paid $200 million for the right to explore and extract rare metals from land owned by the state of Montana.
Answers (1)
New Questions in Business
Some costs do not vary with the quantity of output produced. those costs are called a. marginal costs. b. fixed costs. c. explicit costs. d. average costs.
Answers (1)
What is the purpose of the adjusted trial balance? a. to verify that the debits and credits balance b. to verify that all of the adjusting entries have been posted c. to verify that the net income (loss) is correctly reported d.
Answers (1)
You are graduating from college at the end of this semester and have decided to invest $4 comma 500 at the end of each year into a Roth IRA (a retirement investment account that grows tax free and is not taxed when it is liquidated) for the next 30
Answers (1)
The portion of whole units that were completed with respect to either materials or conversion costs within a given accounting period is the definition of a. equivalent units b. conversion costs c. units started and completed d.
Answers (1)
Which two developments mean that fewer people are sitting through television commercials? "Pom wonderful presents: the greatest movie ever sold"
Answers (1)
Home » Business » Which one of the following statements related to annuities and perpetuities is correct? Multiple Choice An ordinary annuity is worth more than an annuity due given equal annual cash flows for 10 years at 7 percent interest, compounded annually.
Sign Up Forgot Password?