Which One of These Statements Related to Growing Annuities and Perpetuities

question 28

Multiple Choice

Which one of these statements related to growing annuities and perpetuities is correct?

• A)The cash flow used in the growing annuity formula is the initial cash flow at time zero.
• B)Growth rates cannot be applied to perpetuities if you wish to compute the present value.
• C)The future value of an annuity will decrease if the growth rate is increased.
• D)An increase in the rate of growth will decrease the present value of an annuity.
• E)The present value of a growing perpetuity will decrease if the discount rate is increased.

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Definitions:

Pyramid of Biomass

A depiction of the decreasing mass of organisms found as one ascends through the food chain.

Pyramid of Energy

A graphical representation that shows the flow of energy at different trophic levels in an ecosystem, with the largest amount of energy at the base and decreasing amounts as you move up.

Pyramid of Numbers

A graphical representation that shows the number of organisms at each trophic level in an ecosystem.

Biological Magnification

The increased concentration of toxic chemicals, such as PCBs, heavy metals, and certain pesticides, in the tissues of organisms at higher trophic levels in food webs.