T or f: all other components being equal, both the straightforward interest and also the link interest approaches will accrue the same amount of earned interest by the end of the first year.

You are watching: Which of the following statements about annuities are true

T or F; ~ the end of the 2nd year and also all other components remaining equal, a future value based on compound attention will never ever exceed the future worth based on straightforward interest.

T or F: The process of earning link interest permits a depositors or investor come earn attention on any kind of interest earn in front periods.

All other variables held constant, investments paying basic interest need to pay significantly higher interest prices to knife the exact same amount of interest as an account earning compound interest. True or false?

the process of calculating the current value that a cash circulation or a series of cash flows to be received in the future.

Which that the adhering to is true around present worth calculations?Other things staying equal, the present value of a future cash flow increases if the invest time period increases.Other things staying equal, the current value of a future cash flow decreases if the investment time duration increases.

Which of the following statements about annuities room true? inspect all the apply.Ordinary annuities make solved payments in ~ the finish of each period for a specific time period.An annuity early out earns more interest 보다 an ordinary annuity of same time.An annuity due is one annuity that makes a payment in ~ the end of each duration for a certain time period.A perpetuity is a constant, boundless stream of equal cash operation that have the right to be believed of as an infinite annuity.

a series of same payments at regular intervals one of two people made, received, or both, because that a certain variety of periods.

a series of payment made at addressed intervals that proceed infinitely and also can be thought of as an infinite annuity.

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Which the the following is an instance of an annuity?A money that invests in an innovation companies and distributes quarterly dividends for two out of 4 quarters per year but not constantly the same quartersA retirement fund collection up to salary a series of regular payments

T or F: Annuity due payments are made one duration earlier than ordinary annuity payments, for this reason they will certainly earn interest for secondary period.

Luana loves shopping because that clothes, but considering the state of the economy, she has made decision to start saving. In ~ the finish of every year, she will certainly deposit $1,760 in her neighborhood bank, i m sorry pays her 8% annual interest. Luana decides the she will continue to execute this for the next four years. Luana"s save are an instance of one annuity. How much will certainly she conserve by the finish of four years?$6,741.15$8,565.22$7,930.76$5,829.34

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Connect Finance Online accessibility for Essentials the Investments9th EditionAlan J. Marcus, Alex Kane, Zvi Bodie

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