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17 October, 21:07

Which one of the following can be classified as an annuity but not as a perpetuity?

Increasing monthly payments forever

Increasing quarterly payments for six years

Unequal payments each year for nine years

Equal annual payments for life

Equal weekly payments forever

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  1. 17 October, 21:30
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    Answer: Option D

    Explanation: Annuity refers to the payments made by an individual to another at equal intervals of time. And perpetuity refers to an annuity that has no end.

    Hence the correct option is D. As in first two options the amount of payment will increase. Also in the last option the payments are made forever and equally so it is a perpetual annuity.
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