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There are three categories of cash flows: single cash flows, also referred to as "lump sums," a stream of unequal cash flows, and annuities.Based on your understanding of annuities, answer the following questions.
Problem 1: Which of the following statements about annuities are true? Check all that apply.
Option 1: An annuity due earns more interest than an ordinary annuity of equal time.
Option 2: An annuity due is an annuity that makes a payment at the end of each period for a certain time period.
Option 3: A perpetuity is a constant, infinite stream of equal cash flows that can be thought of as an infinite annuity.
Option 4: Ordinary annuities make fixed payments at the end of each period for a certain time period.
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