Moving to another question will save this response. uestion7 Which one of the fo

Question

Moving to another question will save this response. uestion7 Which one of the following statements is correct? °The present value of an annuity is equal to the cash flow amount divided by the discount rate. An annuity due has payments that occur at the beginning of each time period. The future value of an annuity decreases as the interest rate increases. If unspecified, you should assume an annuity is an annuity due. An annuity is an unending stream of equal payments occurring at equal intervals of time. Moving to another question will save this response.

Explanation / Answer

1. Cash flow divided by appropriate discount rate is equal to Present Value.

2.An annuity due is repeating payment that is made at the beginning of each period.

3.There is a direct relationship between future value annuity and interest, so when the interest rate will increase future annuity will also increase.

4.In the absence of information, we will assume annuity to be ordinary annuity and not annuity due.

5.The state of lasting forever means perpetuity

So after observing all the facts we can conclude that option B is correct.

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