Present value factor is also known as the discount factor

Assignment Help Financial Management
Reference no: EM131308224

1. The effective annual rate will increase as the number of compounding periods per year increases.

True

False

2. The time value of money means that a dollar today is worth less than a dollar at any time in the future.

True

False

3. The time value of money means that a dollar today is worth more than a dollar at any time in the future.

True

False

4. Present value factors for amounts are reciprocals of future value factors for amounts.

True

False

5. The present value factor is also known as the discount factor.

True

False

Reference no: EM131308224

Questions Cloud

What is the firm after-flotation cost of common stock : Suppose that a firm has common stock that currently trades for $54.65 in the marketplace, paid an annual dividend last year of $3.25, and has flotation costs of 13.13%. If the firm's return-on-equity is 12% what is the firm's after-flotation cost of ..
Apply the principles of corporate law : The Orleans Parish School Board hired Johnson & Higgins (J&H) to provide consulting services. J & H provided those services over the next few years but was then acquired by Marsh & McLennan, a larger insurance firm. Describe what happened in the rela..
Annual interest on its accounts : You're trying to save to buy a new $201,000 Ferrari. You have $51,000 today that can be invested at your bank. The bank pays 5.9 percent annual interest on its accounts. How long will it be before you have enough to buy the car?
What kind of deal did the player snag : In 2015, a baseball player signed a contract reported to be worth $107.2 million. The contract was to be paid as $16.2 million in 2015, $16.1 million in 2016, $18.6 million in 2017, $18.7 million in 2018, $18.7 million in 2019, and $18.9 million in 2..
Present value factor is also known as the discount factor : The effective annual rate will increase as the number of compounding periods per year increases. The time value of money means that a dollar today is worth less than a dollar at any time in the future. Present value factors for amounts are reciprocal..
How much is the bond worth today : Suppose you have $1000 and plan to purchase a 4-year certificate of deposit (CD) that pays 3% interest, compounded annually. How much will you have when the CD matures? Suppose a U.S. government bond promises to pay $2254.73 four years from now. If t..
Series of equal payments separated by equal time intervals : An amortized loan is generally structured to provide constant payments each of which contains the same proportions of interest and principal repayment. An annuity is a series of equal payments separated by equal time intervals. The future and present..
Calculate macaulay and modified durations of each bond : Grace Hesketh is the owner of an extremely successful dress boutique in downtown Chicago. Although high fashion is Grace’s first love, she’s also interested in investments, particularly bonds and other fixed-income securities. Calculate the Macaulay ..

Reviews

Write a Review

Financial Management Questions & Answers

  Exceed an investment in the money market fund

You are going to invest in a stock mutual fund with a 7 percent front-end load and a 1.4 percent expense ratio. You also can invest in a money market mutual fund with a 4 percent return and an expense ratio of 0.1 percent. If you plan to keep your in..

  What is the amount to use as the annual sales figure

Winnebagel Corp. currently sells 38,000 motor homes per year at $76,000 each, and 16,000 luxury motor coaches per year at $113,000 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 33,000 of the..

  Quintessential firm that operates on human capital.

Bill Gates has said that Microsoft is the quintessential firm that operates on "human capital." He once said that if someone developed a better operational system, Microsoft would be out of business in 90 days. If indeed the software industry is driv..

  Will you have enough money in a year to purchase the trip

Your parents have given you $1,200 a year before your graduation so that you can take a trip when you graduate. You wisely decide to invest the money in a bank CD that pays 6.83 percent interest. You know that the trip costs $1,233 right now and that..

  Calculate the cost of capital for rio tinto

Calculate the cost of capital for Rio Tinto and state two reasons for why it may have declined since the GFC. Justify your answers using theory, calculations and research into current events.

  Using straight-line depreciation

Your company is considering a new project that will require $985,000 of new equipment at the start of the project. The equipment will have a depreciable life of 9 years and will be depreciated to a book value of $157,000 using straight-line depreciat..

  What would the value be if payments occurred forever

An investment offers $6,200 per year for 20 years, with the first payment occurring one year from now. If the required return is 7 percent, what is the value of the investment? What would the value be if the payments occurred for 45 years? What would..

  The current value of the lease

Your car dealer is willing to lease you a new car for $379 a month for 84 months. Payments are due on the first day of each month starting with the day you sign the lease contract. If your cost of money is 4.8 percent, what is the current value of th..

  What effect would it have on the aggregate amount

What effect would this joint proposal have on the optimal capital structure of a firm, according to the Miller model? -  What effect would it have on the aggregate amount of corporate debt outstanding?

  What is the degree of operating leverage

A proposed project has fixed costs of $96,000 per year. The operating cash flow at 6,600 units is $96,200. Ignoring the effect of taxes, what is the degree of operating leverage? If units sold rise from 6,600 to 7,100, what will be the new operating ..

  Residual dividend policy-what will be total dividend payment

The capital budget of Creative Ventures Inc. is $1,000,000. The company wants to maintain a target capital structure that is 30% debt and 70% equity. The company forecasts that its net income this year will be $800,000. If the company follows a resid..

  Dividend is expected to grow forever at constant rate

Constant Growth Valuation Woidtke Manufacturing's stock currently sells for $34 a share. The stock just paid a dividend of $3.00 a share (i.e., D0 = $3.00), and the dividend is expected to grow forever at a constant rate of 9% a year. What stock pric..

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