Question

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

Answer 1

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.