Assuming Equal Time Intervals Between the Payments and a Constant

Assuming equal time intervals between the payments and a constant rate of return,which of the following cash flow patterns represents an annuity? $\begin{array}{|l|c|c|c|c|c|c|}\hline & \text { Year 1 } & \underline{\text { Year 2 }} & \underline{\text { Year 3 }} & \underline{\text { Year 4 }} & \underline{\text { Year 5 }} & {\text { Year 6 }} \\\hline \text { A) } & \$ 1,000 & \$ 1,000 & \$ 1,000 & \$ 1,000 & \$ 1,000 & \$ 1,000 \\\hline \text { B) } & \$ 500 & \$-0- & \$ 500 & \$ 500 & \$ 500 & \$-0- \\\hline \text { C) } & \$ 100 & \$ 200 & \$ 300 & \$ 400 & \$ 500 & \$ 600 \\\hline\end{array}$

A) A
B) B
C) C
D) Any of the answers can represent an annuity.

Correct Answer:

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