Which One of the Following Statements Related to Annuities and Perpetuities

question 70

Multiple Choice

Which one of the following statements related to annuities and perpetuities is correct?

• A)An ordinary annuity is worth more than an annuity due given equal annual cash flows for ten years at 7 percent interest, compounded annually.
• B)A perpetuity comprised of $100 monthly payments is worth more than an annuity comprised of $100 monthly payments, given an interest rate of 12 percent, compounded monthly.
• C)Most loans are a form of a perpetuity.
• D)The present value of a perpetuity cannot be computed, but the future value can.
• E)Perpetuities are finite but annuities are not.

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