Practice prompt · Q:time-value-of-money-and-financial-mathematics/annuity-classification-001

Classify a payment stream from its dates

Formative item on annuity conditions and beginning versus end timing.

Updated Sep 10, 2026 Review due Nov 7, 2026

Practice

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Four equal $2,000 payments occur at t = 0, 1, 2, and 3. The valuation date is t = 0. How should the stream be classified?

Choose the best answer. A A four-payment annuity due B A four-payment ordinary annuity C A five-payment annuity due D Not an annuity because one payment occurs at t = 0

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Answer: A

Choice A is correct. The four payments at t = 0, 1, 2, and 3 are equal, equally spaced, finite, and beginning-of-period.