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? $$\begin{array} { | l | c | c | c | c | c | c | } \hline & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Year 4 } & \text { Year 5 } & \text { Year 6 } \\\hline \text { A) } & \$ 1,000 & \$ 1,000 & \$ 1,000 & \$ 1,000 & \$ 1,000 & \$ 1,000 \\\hline \text { B) } & \$ 500 & \$ - 0 - & \$ 500 & \$ 500 & \$ 500 & \$ - 0 - \\\hline \text { C) } & \$ 100 & \$ 200 & \$ 300 & \$ 400 & \$ 500 & \$ 600 \\\hline\end{array}$$

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

Correct Answer:

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