A time line is not meaningful unless all cash flows occur annually.

Which of the following statements is CORRECT? 1. A time line is not meaningful unless all cash flows occur annually. 2. Time lines are not useful for visualizing complex problems prior to doing actual calculations. 3. Time lines cannot be constructed in situations where some of the cash flows occur annually but others occur quarterly. 4. Time lines can be constructed for annuities where the payments occur at either the beginning or the end of the periods. 5. 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

The correct answer is option 4. Timelines can be constructed for annuities where the payments occur at either the beginning or the end of the periods. And, the payments can be unequal.

Option 1 is incorrect because A timeline is useful for non-annual payments as well.

Option 2 is incorrect because timelines are useful for visualizing complex problems prior to doing actual calculations.

Option 3 is incorrect because timelines can be constructed in situations where some of the cash flows occur annually but others occur quarterly.

Option 5 is incorrect because the payments can be uneven.

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