Which of the following statements is CORRECT?
A) Some of the cash flows shown on a time line can be in the form of annuity payments, but none can be uneven amounts.
B) A time line is not meaningful unless all cash flows occur annually.
C) Time lines are not useful for visualizing complex problems prior to doing actual calculations.
D) Time lines cannot be constructed in situations where some of the cash flows occur annually but others occur quarterly.
E) Time lines can be constructed for annuities where the payments occur at either the beginning or the end of the periods.

Question

Quizplus · Accepted Answer

Time lines can be constructed for annuities where the payments occur either at the beginning or the end of the periods. This is because the timing of the payments can affect the present value and future value calculations. As long as the timing of the cash flows is consistent, a time line can be used to visualize the cash flows and calculate their values. Other options are incorrect because cash flows can be uneven, time lines are useful for visualizing problems, and time lines can be constructed for any type of cash flow pattern, not just annual payments.

Which of the Following Statements Is CORRECT