Which of the following statements is correct?
A) A time line is not meaningful unless all cash flows occur annually.
B) Time lines are useful for visualizing complex problems prior to doing actual calculations.
C) Time lines cannot be constructed in situations when the cash flows occur at yearly and quarterly frequencies
D) Time lines cannot be constructed for annuities where the payments occur at the beginning of the periods.

Question

Quizplus · Accepted Answer

Time lines are a helpful visual tool for understanding complex cash flow problems before performing actual calculations. They can be constructed regardless of whether the cash flows occur annually, quarterly, or even on a daily basis. Additionally, time lines can be created for annuities with payments at the beginning of periods by simply shifting the initial cash flow forward by one period.

Which of the Following Statements Is Correct