Question

Which of the following statements is CORRECT? a. A time line is not meaningful unless all cash flows occur annually. b. Time lines are not useful for visualizing complex problems prior to doing actual calculations. c. Time lines can be constructed to deal with situations where some of the cash flows occur annually but others occur quarterly. d. Time lines can only be constructed for annuities where the payments occur at the end of the periods, i.e., for ordinary annuities. e. Time lines cannot be constructed where some of the payments constitute an annuity but others are unequal and thus are not part of the annuity.

Answer 1

Answer: Option C

Explanation: The correct statement is time lines can be constructed to deal with situations where some of the cash occur annually but others occur quarterly. A time line can be defined as the display of events in a chronological order. While solving problems related to cash flow, time line is prepared to ease the calculations by showing cash flow as the the order of their occurrence.