Which one of the following statements related to annuities and perpetuities is correct?
A) An ordinary annuity is worth more than an annuity due given equal annual cash flows for ten years at 7 percent interest, compounded annually.
B) A perpetuity comprised of $100 monthly payments is worth more than an annuity comprised of $100 monthly payments, given an interest rate of 12 percent, compounded monthly.
C) Most loans are a form of a perpetuity.
D) The present value of a perpetuity cannot be computed, but the future value can.
E) Perpetuities are finite but annuities are not.
Correct Answer:
Verified
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