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 earns more interest than an ordinary annuity of equal time.
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.
A perpetuity is a constant, infinite stream of equal cash flows that can be thought of as an infinite annuity.
