Chapter 4: Annuities and Capitalized Cost

Question 1

It consists of a series of equal payments made at equal intervals of time

Answer 1

Annuity

Question 2

One where the equal payments are made at the end of each payment period starting from the first period

Answer 2

Ordinary Annuity

Question 3

One where the payment of the first amount is deferred a certain number of periods after the first

Answer 3

Deferred Annuity

Question 4

One where the payments are made at the start of each period, beginning from the first period.

Answer 4

Annuity Due

Question 5

An annuity where the payment periods extend forever or in which the periodic payments continue indefinitely

Answer 5

Perpetuity

Question 6

In ordinary annuity, the amounts of all payment are _____

Answer 6

equal

Question 7

bIt is paid on all amounts in the ordinary annuity

Answer 7

Compound interest

Question 8

The _____ of any structure or property (equipment, machinery, building, etc) is the sum of its first cost and the present worth of all costs for replacement, operation, and maintenance

Answer 8

Capitalized cost

Question 9

We define it to mean a series of payments made at infinitely short intervals of time

Answer 9

Continuous flow of funds

Question 10

What are the 4 classifications of annuity in engineering economy?

Answer 10

Ordinary annuity, deferred annuity, annuity due, perpetuity

Question 11

In ordinary annuity, ______ is paid on all amounts in the annuity

Answer 11

Compound interest

Question 12

Accumulation of a certain amount be setting equal amounts _______

Answer 12

periodically

Question 13

Payment of a debt by a series or equal payments at equal intervals of time occurs when goods are bought on the ____ ____

Answer 13

installment plan

Question 14

It is the natural extension and application of perpetuity

Answer 14

Capitalized cost