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

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) A cash cow

D) A deferred annuity

One characteristic of an annuity is that an equal sum of money is deposited or withdrawn each period.

Answer:  TRUE

The present value of an annuity increases as the discount rate increases.

Answer:  FALSE

We can use the present value of an annuity formula to calculate constant annual loan payments.

Answer:  TRUE

A compound annuity involves depositing or investing a single sum of money and allowing it to grow for a certain number of years.

Answer:  FALSE

When repaying an amortized loan, the interest payments increase over time.

Answer:  FALSE

An amortized loan is a loan paid in unequal installments.

Answer:  FALSE

A loan amortization schedule provides a breakdown of loan payments into principal and interest payments.

Answer:  TRUE

Holding all other variables constant, payment per period for an annuity due will be higher than an ordinary annuity.

Answer:  FALSE

What is the present value of an annuity of $100 received at the end of each year for seven years?

What is the present value of an annuity of $100 received at the end of each year for seven years? The first payment will be received one year from today (round to nearest $10). The discount rate is 13%.  To solve this problem with a financial calculator, the correct choice is

A) N=7, i=13, PMT= 100, FV=0, solve for PV

B) N=7, i=13, PV= 100, FV=0, solve for FV

C) N=7, i=13, PMT= 100, FV=100, solve for PV

D) N=7, i=.13, PMT= 100, FV=0, solve for PV

What is the present value of an annuity of $27 received at the beginning of each year for the next six years? The first payment will be received today, and the discount rate is 10% (round to nearest $10).

A) $120

B) $130

C) $100

D) $110

What is the present value of $150 received at the beginning of each year for 16 years? The first payment is received today. Use a discount rate of 9%, and round your answer to the nearest $10.

A) $1,360

B) $1,480

C) $1,250

D) $1,210

What is the present value of $250 received at the beginning of each year for 21 years? Assume that the first payment is received today. Use a discount rate of 12%, and round your answer to the nearest $10.

A) $1,870

B) $2,090

C) $2,117

D) $3,243

What is the present value of an annuity of $12 received at the end of each year for seven years? Assume a discount rate of 11%. The first payment will be received one year from today (round to the nearest $1).

A) $25

B) $40

C) $57

D) $118