Question

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:

A) a perpetuity.
B) an ordinary annuity.
C) an annuity due.
D) a growing perpetuity.

Answer 1

The cash flow stream described in the question is called an ordinary annuity.

Step-by-step explanation:

The cash flow stream described in the question, where the same amount is received at the end of each year for six years, is called an ordinary annuity.

An ordinary annuity is a series of equal payments made at regular intervals of time, with the last payment occurring at the end of the specified period. In this case, the amount received each year is the same, making it an ordinary annuity.

For example, if you receive $1000 at the end of each year for six years, that would be considered an ordinary annuity.