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 cannot be constructed in situations where some of the cash flows occur annually but others occur quarterly.

d. Time lines can be constructed for annuities where the payments occur at either the beginning or the end of the periods.

e. Some of the cash flows shown on a time line can be in the form of annuity payments, but none can be uneven amounts

Answer 1

Time lines can be constructed for annuities where the payments occur at either the beginning or the end of the periods because they can easily be formulated as there would be uniformity in the receipt of the flow of annuities of cash flows.

Other statement are false because timeline is meaningful and timeline can be constructed in situations where cash flows occur quarterly or annually or cash flows can be in uneven amounts.

Correct answer would be option (d)Time lines can be constructed for annuities where the payments occur at either the beginning or the end of the periods.