Which one of these statements related to growing annuities and perpetuities is correct?
A) You can compute the present value of a growing annuity but not a growing perpetuity.
B) In computing the present value of a growing annuity, you discount the cash flows using the growth rate as the discount rate.
C) The future value of an annuity will decrease if the growth rate is increased.
D) An increase in the rate of growth will decrease the present value of an annuity.
E) The present value of a growing perpetuity will decrease if the discount rate is increased.
Correct Answer:
Verified
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