What Is a Series of Equal Payments to Be Received

question 77

Multiple Choice

What is a series of equal payments to be received at the end of each period,for a finite period of time,called?

• A)A level perpetuity
• B)A growing perpetuity
• C)An annuity due
• D)An ordinary annuity

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Definitions:

Required Rate

The Required Rate, often known as the required rate of return, is the minimum annual percentage earned by an investment that will induce individuals or companies to put money into a particular project or investment.

Cash Flows

The total amount of money being transferred into and out of a business, considered as the lifeblood of corporate finance.

Discounted Payback Period

The time it takes for the cash inflows from a capital investment project to equal the initial outlay, adjusted for the time value of money.

Initial Cost

The amount of money spent to acquire, or invest in, an asset or project before it begins generating revenue.