Which of the following statements is CORRECT?
A) Time lines cannot be constructed where some of the payments constitute an annuity but others are unequal and thus are not part of the annuity.
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 can be constructed to deal with situations where some of the cash flows occur annually but others occur quarterly.
E) Time lines can only be constructed for annuities where the payments occur at the end of the periods, i.e., for ordinary annuities.

Question

Quizplus · Accepted Answer

Time lines can be constructed to deal with situations where some of the cash flows occur annually but others occur quarterly. Time lines can also be used for visualizing complex problems and comparing different cash flow scenarios. However, option A is incorrect because time lines can be constructed for situations where some payments are part of an annuity while others are not, and option B is incorrect because time lines can be constructed for any time frame. Option E is also incorrect because time lines can be constructed for annuities with payments at the beginning and end of the period (called annuities due and ordinary annuities, respectively).

Which of the Following Statements Is CORRECT