Which of the following statements is CORRECT?
A) A time line is not meaningful unless all cash flows occur annually.
B) Time lines are not useful for visualizing complex problems prior to doing actual calculations.
C) Time lines cannot be constructed to deal with situations where some of the cash flows occur annually but others occur quarterly.
D) Time lines can only be constructed for annuities where the payments occur at the end of the periods, i.e., for ordinary annuities.
E) Time lines can be constructed where some of the payments constitute an annuity but others are unequal and thus are not part of the annuity.

Question

Quizplus · Accepted Answer

Time lines can be constructed where some of the payments are part of an annuity and others are not. This is known as a mixed stream of cash flows. Time lines are a useful tool for visualizing and analyzing complex problems before doing actual calculations. Cash flows can occur annually, quarterly, or at any other frequency. Finally, time lines can be constructed for both ordinary annuities and annuities due, where payments occur at the beginning of the period.

Which of the Following Statements Is CORRECT