Which of the Following Statements Regarding Annuities Is FALSE?
A) $$\text { Di PV of an annuity } = C \times \frac { 1 } { r } \left( 1 - \frac { 1 } { ( 1 + r ) ^ { \mathrm { N } } } \right)$$

question 21

Multiple Choice

Which of the following statements regarding annuities is FALSE?

• A) Most car loans, mortgages, and some bonds are annuities.
• B) An annuity is a stream of N equal cash flows paid at regular intervals.
• C) The difference between an annuity and a perpetuity is that a perpetuity ends after some fixed number of payments.
• \[\text { Di PV of an annuity } = C \times \frac { 1 } { r } \left( 1 - \frac { 1 } { ( 1 + r ) ^ { \mathrm { N } } } \right)\]

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Definitions:

Endowment Fund

A financial asset, in the form of donations, made to non-profit organizations that uses the generated income for a specific purpose.

Present Value

Present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return, used in discounted cash flow analysis to assess the profitability of an investment.

Future Value

Future value is the value of a current asset at a specified date in the future based on an assumed rate of growth over time.

Interest Rate

The interest rate applied to a loan, frequently shown as an annual percentage of the loan's outstanding figure to the borrower.