Which of the Following Statements Regarding Annuities Is FALSE

question 38

Multiple Choice

Which of the following statements regarding annuities is FALSE?

• A)PV of an annuity = C ×
• B)The difference between an annuity and a perpetuity is that a perpetuity ends after some fixed number of payments.
• C)An annuity is a stream of N equal cash flows paid at regular intervals.
• D)Most car loans,mortgages,and some bonds are annuities.

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Definitions:

EBIT-EPS Analysis

A tool used to study the effect of financing alternatives on a company's earnings per share and taxes.

Leverage

The strategic use of financial instruments or borrowed capital, such as debt, to increase an investment's potential return.

Profitability

A measure of how efficient a company is at generating profits from its resources, often expressed in terms of margins or ratios.

EBIT

A financial metric called EBIT that calculates a company's profits prior to the deduction of interest and income tax costs, encompassing all other expenses.