BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Annuity Factor
|
|
|
Regular Annuity
|
|
|
Annuity Due
|
|
|
Deferred Annuity
|
Detailed explanation-1: -An annuity due is an annuity in which the cash flows, or payments, occur at the beginning of the period. An annuity due is also called an annuity in arrears. The cash flows occur at the beginning of years 1 through 5.
Detailed explanation-2: -An annuity-due is an annuity whose payments are made at the beginning of each period. Deposits in savings, rent or lease payments, and insurance premiums are examples of annuities due. Each annuity payment is allowed to compound for one extra period.
Detailed explanation-3: -An ordinary annuity is a series of regular payments made at the end of each period, such as monthly or quarterly. In an annuity due, by contrast, payments are made at the beginning of each period. Consistent quarterly stock dividends are one example of an ordinary annuity; monthly rent is an example of an annuity due.
Detailed explanation-4: -If the periodic payments are made at the end of each period, the annuity is called an immediate annuity or ordinary annuity.