Which of the following statements is CORRECT?
a. Time lines can be constructed for annuities where the payments occur at either the beginning or the end of the periods.
b. Some of the cash flows shown on a time line can be in the form of annuity payments, but none can be uneven amounts.
c. A time line is not meaningful unless all cash flows occur annually.
d. Time lines are not useful for visualizing complex problems prior to doing actual calculations.
e. Time lines cannot be constructed in situations where some of the cash flows occur annually but others occur quarterly.
2. Your aunt is about to retire, and she wants to sell some of her stock and buy an annuity that will provide her with income of $50,000 per year for 30 years, beginning a year from today. The going rate on such annuities is 7%. How much would it cost her to buy such an annuity today?
a. $667,214
b. $620,452
c. $635,442
d. $700,575
e. $574,924