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Future value of annuities There are two categories of cash flows single cash flows referred to as lump sums and annuities Based on your understanding of annuities answer the following question

Future value of annuities There are two categories of cash flows: single cash flows, referred to as "lump sums, " 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. An annuity due is an annuity that makes a payment at the end of each period for a certain time period. Ordinary annuities make fixed payments at the end of each period for a certain time period. An annuity due earns more interest than an ordinary annuity of equal time. A perpetuity is a constant, infinite stream of equal cash flows that can be thought of as an infinite annuity. Which of the following is an example of an annuity? A fund that invests in technology companies and distributes quarterly dividends for two out of four quarters per year but not always the same quarters A retirement fund set up to pay a series of regular payments Luana 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 $1, 340 in her local bank, which pays her 6% annual interest. Luana decides that she will continue to do this for the next four years. Luana's savings are an example of an annuity. How much will she save by the end of four years? $5, 861.99 $6, 213.70 $4, 643.24 $4, 982.69 If Luana deposits the money at the beginning of every year and everything else remains the same, she will save _____ by the end of four years.

 

Apr 30 2020 View more View Less

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