Higher present value than similar ordinary annuity

Assignment Help Financial Management
Reference no: EM131025549

Which of the following statements is NOT CORRECT, assuming positive interest rates?

A 5-year $100 annuity due will have a higher present value than similar ordinary annuity

or

A 15-year, $100,000 mortgage will have larger monthly payments than an otherwise similar 30-year mortgage

or

If an investment pays 10% interest compounded annually, its effective rate will also be 10%.

or

Securities A and B offer the same nominal rate of interest, but A pays interest quarterly and B pays semiannually. Investment B will have the higher present value.

or

An investment's nominal interest rate will always be equal to or greater than its effective annual rate.

Reference no: EM131025549

Questions Cloud

Exploring covered interest arbitrage opportunities : Ferd Rumpledink, a foreign exchange trader at UBS Bank, is exploring covered interest arbitrage opportunities. He has 10,000,000 USD (or the CHF equivalent at the current spot rate) to invest and is considering a 180 day investment. Show your work on..
What will be the value in your account at the end of year : Assume you are to receive a 30-year annuity with annual payments of $100. The first payment will be received at the end of Year 1, and the last payment will be received at the end of year 25. You will invest each payment in an account that pays 5.5 p..
Find the future value of a ordinary annuity : Find the future value of a ordinary annuity, $3,000 a year for five years at 8%. I need to see what the N is, the I/Y is, the PV is, the PMT is, and the FV is. Also can you please show me your work so I understand where the numbers come from?
Calculate the nominal terminal value of the investment : Suppose that the inflation rate is 2.5% and the real terminal value of an investment is expected to be $20,000 in 2 years. Calculate the nominal terminal value of the investment at the end of year 2.
Higher present value than similar ordinary annuity : A 5-year $100 annuity due will have a higher present value than similar ordinary annuity. A 15-year, $100,000 mortgage will have larger monthly payments than an otherwise similar 30-year mortgage. An investment's nominal interest rate will always be ..
Coupon bond with face value and maturity : A 9 percent coupon (paid semiannually) bond, with a $1,000 face value and 15 years remaining to maturity. The bond is selling at $985 (Do not round intermediate calculations.  An 8 percent coupon (paid quarterly) bond, with a $1,000 face value and 10..
Find the probability that the plant will use more : A manufacturing plant uses a specific bulk product. The amount of product used in one day can be modeled by an exponential distribution with β = 4 (measurements in tons). Find the probability that the plant will use more than 4 tons on a given day..
Convert the following nominal gdp numbers into real gdp : Convert the following nominal GDP numbers into real GDP using the CPI that is given. Plot both real and nominal GDP putting the years on the horizontal axis and GDP on the vertical axis. Comment upon why it is misleading to compare nominal GDP acro..
Cash and marketable securities worth-net working capital : Winston Electronics reported the following information at its annual meetings. The company had cash and marketable securities worth $1,236,290, accounts payables worth $4,159,780, inventory of $7,121,620, accounts receivables of $3,489,210, notes pay..

Reviews

Write a Review

Financial Management Questions & Answers

  What is your portfolio return

Portfolio Return At the beginning of the month, you owned $6,200 of Company G, $8,500 of Company S, and $2,000 of Company N. The monthly returns for Company G, Company S, and Company N were 7.75 percent, -1.55 percent, and -.18 percent. What is your ..

  What is the expected return on the portfolio

You own a portfolio that has $3,500 invested in Stock A and $4,500 invested in Stock B. If the expected returns on these stocks are 11 percent and 14 percent, respectively, what is the expected return on the portfolio?

  Pledges to increase its dividend

Metroplex Corporation will pay a $3.80 per share dividend next year. The company pledges to increase its dividend by 3.0 percent per year indefinitely. If you require an 11.9 percent return on your investment, you will pay $___________ for the compan..

  Justify and criticize the usual assumption made in

justify and criticize the usual assumption made in financial management literature that the objective of a company is

  Company acquires inventory on account

Your company acquires inventory on account. Select the impact on your financial statements.

  Project for the ultimate recreational tennis racket

You are evaluating a project for The Ultimate recreational tennis racket, guaranteed to correct that wimpy backhand. You estimate the sales price of The Ultimate to be $490 per unit and sales volume to be 1,000 units in year 1; 1,250 units in year 2;..

  What is the payback period without discounting cash flows

Consider the following four-year project. The initial after-tax outlay or after-tax cost is $1,000,000. The future after-tax cash inflows for years 1, 2, 3 and 4 are: $400,000, $300,000, $200,000 and $200,000, respectively. What is the payback period..

  Approach to retirement distribution at beginning of year

For how many years a retirement fund will last if one follows 4% approach to retirement distribution at the beginning of every year? Assume expected return and inflation to be 6% and 4.5% respectively?

  Seed them with dry ice and silver iodine particles

The Russian air force is being called on this year to intercept storms advancing on Moscow and to seed them with dry ice and silver iodine particles. The idea is to make snow drop on villages in the countryside instead of piling up in Moscow.

  Computer-based order entry system

Your firm is contemplating the purchase of a new $585,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $61,000 at the end of that time.

  Relationship between company cash budget-income statement

Which of the following statements is most correct concerning the relationship between a company’s cash budget and its income statement? a. if net income is positive, then cash flow could be positive or negative but if net income is negative, cash flo..

  The donley brothers company had encountered the problem of

the donley brothers company had encountered the problem of latent defects in some of its purchased castings. being

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd