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:

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A common vision condition also known as nearsightedness, where close objects appear clearly but distant ones do not because the eye's shape focuses light in front of the retina.

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