What Is a Series of Equal Payments to Be Received

question 67

Multiple Choice

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

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

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Definitions:

Internal Rate of Return (IRR)

A method of calculating an investment's rate of return that makes the net present value of all cash flows equal to zero.

Mutually Exclusive Investments

Mutually exclusive investments are investment options where the choice of one alternative precludes the selection of another, requiring a careful comparison to choose the best option.

Capital Rationing

Occurs when investors or management place a constraint on the size of the firm’s capital budget during a particular period.

Accounting Rate of Return

A financial ratio that measures the profitability of an investment by dividing the average annual profit by the initial investment cost.