Assuming equal time intervals between the payments and a constant rate of return, which of the following cash flow patterns represents an annuity? $\begin{array}{rrrrrrr}
&\text { Year } & \text { Year } & \text { Year } & \text { Year } 4 & \text { Year }5& \text { Year } 6 \
\text {A)}&\$ 1,000 & \$ 1,000 & \$ 1,000 & \$ 1,000 & \$ 1,000 & \$ 1,000 \
\text {B)}&\$ 500 & \$ 0 & \$ 500& \$ 500 & \$500& \$0\
\text {C)}&\$100&\$200&\$300&\$400&\$500&\$600
\end{array}$

Question

Assuming equal time intervals between the payments and a constant rate of return, which of the following cash flow patterns represents an annuity? $\begin{array}{rrrrrrr}
&\text { Year } & \text { Year } & \text { Year } & \text { Year } 4 & \text { Year }5& \text { Year } 6 \
\text {A)}&\$ 1,000 & \$ 1,000 & \$ 1,000 & \$ 1,000 & \$ 1,000 & \$ 1,000 \
\text {B)}&\$ 500 & \$  0 & \$ 500& \$ 500 & \$500& \$0\
\text {C)}&\$100&\$200&\$300&\$400&\$500&\$600
\end{array}$

Quizplus · Accepted Answer

An annuity is a series of equal payments made at regular intervals. Option A has equal payments of $1,000 each year, fitting the definition of an annuity.

Assuming Equal Time Intervals Between the Payments and a Constant