If your investment pays the same amount at the end of each year for a period of six years, the cash flow stream is called:

Question

Quizplus · Accepted Answer

An ordinary annuity consists of a series of equal cash flows at the end of each period for a finite number of periods. In this case, the cash flows are the same amount and occur at the end of each of the six years, making it an ordinary annuity. A perpetuity is a series of equal cash flows that continue indefinitely, while an annuity due has cash flows at the beginning of each period instead of at the end. A growing perpetuity has cash flows that increase at a steady rate over time.

If Your Investment Pays the Same Amount at the End