Reference no: EM131308216
1. The principle behind time value of money is based on the fact that:
A. a sum of money in the future is worth less than the same sum in hand today.
B.. a sum of money in hand today is worth more than the same sum in the future.
C. a sum of money in hand today is worth less than the same sum in the future.
D."a sum of money in hand today is worth more than the same sum in the future" and "a sum of money in the future is worth less than the same sum in hand today".
2. Holding all other variables constant, an increase in the interest rate will cause ____ to decrease.
A. future values
B. present values
C. growth rates
D. annuity payments
3. If the interest rate is 0%:
A. future amounts have an infinite present value.
B. the future value of an investment is less than the sum of its cash flows.
C. future amounts have zero present value.
D. the present value of amounts to be received in the future is equal to the sum of those amounts.
4. Finding the discounted value of $1,000 to be received at the end of each of the next five years requires calculating the:
A. present value of a deferred annuity.
B. present value of an annuity.
C. future value of a deferred annuity.
D. future value of an annuity
5. The present value of an annuity will be decreased by:
A. a decrease in the number of payments.
B. a decrease in the discount rate.
C. a decrease in the amount of the payment in each per period.
D."a decrease in the number of payments" and "a decrease in the amount of the payment in each per period".
E. All of these choices are correct.
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