Time Value of Money Module

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1、TimeValueofMoneyModule3copyStudent:___________________________________________________________________________1.Compoundingistheconversionoffuturecashflowamountstotheirpresentvalue.  True    False 2.Theinterestthataccruesonboththeprincipalandthepastunpaidaccruedinterestiscalledcompoundinterest.  

2、True    False 3.Thefuturevalueofasinglesumistheoriginalprincipalamountplusthecompoundintereststatedasofaspecificfuturedate.  True    False 4.Theformulatocomputethefuturevalueofasinglesumis:FV=PV´(1-i)n.  True    False 5.Discountingistheprocessofconvertingafuturecashflowtoapresentvalue.  True    F

3、alse 6.TheformulatocomputethepresentvalueofadollarisPV=FV´.  True    False 7.Anannuityisaseriesofequalcashflowsoccurringatirregularintervalswithinterestcompoundedataspecificrate.  True    False 8.Anordinaryannuityisifthecashflowsoccuronthefirstdayofeachperiod.  True    False 9.Thefuturevalueofano

4、rdinaryannuityisdeterminedimmediatelyafterthelastcashflowintheseriesoccurs.  True    False 10.Theformulaforthefuturevalueofanordinaryannuityofanyamountis:  True    False 11.Thefuturevalueofanannuitydueisdeterminedoneperiodafterthefirstcashflowintheseries.  True    False 12.Thepresentvalueofanannu

5、ityisthepresentvalueofaseriesofequalcashflowsthatoccurinthefuture.  True    False 13.Tocalculatethepresentvalueoffourannualinstallmentsof$1,000atan8%interestratebeginningonJanuary1,2013andpaymentsdueonDecember31ofeachyear,onewouldusethepresentvalueofanordinaryannuitytable.  True    False 14.Thefo

6、rmulatocalculatethepresentvalueofanordinaryannuityis:  True    False 15.Thepresentvalueofanannuitydueisdeterminedonthedateofthelastcashflowintheseries.  True    False 16.Tocalculatethepresentvalueofanannuityduetheformulais:  True    False 17.Thepresentvalueofadeferredannuityisdeterminedontoday’sd

7、ate,becausetheannuitypaymentsbeginsomeperiodaftertoday’sdate.  True    False 18.Theformulatocalculateapresentvalueofadeferredannuityis:PVdeferred=C´(ConvertedFactorforPresentValueofDeferredAnnuityof1)  True    False 19