The payment or receipt of a series of equal cash flows per period, at the end of each period, for a specified amount of time is called a(n) ____.
A) annuity due
B) perpetuity
C) ordinary annuity
D) simple interest

Question

Quizplus · Accepted Answer

An ordinary annuity involves a series of equal cash flows per period at the end of each period for a specified amount of time. An annuity due involves payment or receipt of a series of equal cash flows per period at the beginning of each period for a specified amount of time. A perpetuity involves an infinite series of equal cash flows at regular intervals. Simple interest is the interest earned only on the original principal. Therefore, option C is the correct answer.

The Payment or Receipt of a Series of Equal Cash