Cash equivalents include short-term investments that will be converted to cash within 120 days. True Fals
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Cash equivalents include short-term investments that will be converted to cash within 120 days. True Fals
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- A fixed stream of cash flows occurring at the beginning of each period for a fixed period of time is known as: Select one: a. Ordinary annuity b. Constant annuity c. Annuity due d. Financial annuityCertain highly liquid, short-term investments of 90 days maturity or less are often combined with Cash and presented as a single amount called Cash and Cash Equivalents on the balance sheet. Select one: True FalseRefer to the accompanying cash-flow diagram (see Figure), and solve for the unknown quantity in If G = $1,000, N = 12, and i = 10% per period, thenF = ? that makes the equivalent value of cash outflows equal to the equivalent value of the cash inflow, F.
- TRUE OR FALSE: Write TRUE if the statement is correct; incorrect, write FALSE. 1. Managers and investors can use the time value of money analysis to compare current cash flows against future cash flows. 2. Because an ordinary annuity is paid at the beginning of each period rather than at the end, the payment collects interest during the period for which it is made. 3. You borrow Php 12,000 from your aunt and promise to repay her at the rate of P1,000 each month for the next year. This is an example of an annuity payout. 4. Compounding procedures are used to determine the present value, whereas discounting approaches are used to determine the future value. 5. Debtors establish payment amounts and the allocation of each payment to interest and principal using a loan amortization plan. 6. A 6 percent interest rate for five years will produce a higher present value interest factor than a 5 percent interest rate for six years. 7. 11.4359 is the factor rate if an investor is…in general, positive cash flows are moved to the end of the interest period in which they happen. Select one: True FalseTRUE OR FALSE. IF FALSE CORRECT THE SENTENCE. A. True OR False: Deferred Annuities are annuities that have payments that don't begin until after the end of the second period. B. Uniform gradient cash flow is a cash flow that increases by a uniform amount each period, beginning at the end of period one.
- = 6) Find the internal rates of return on a cash flow with deposit amounts of A = A₁ = 240, B₁ 120, A₂ = 20, B₂ = 290, and withdrawal amounts of Bo at times t = 0, t = 1, t = 2, respectively. = 40, 10,In order to be classified as a cash equivalent, an investment mus have a maturity date of a. Less than six months b. Three to six months c. Six to twelve months d. Three months or lessFind the internal rate of return (IRR) for the following cash flows. Enter your answer as a percent and include at least two decimal points, e.g., 8.35 for 8.35 %, not 0.08. Year Cash Flow 0 750 1 200 2 375 3 250 4 100 5 75
- Consider two assets with the following cash flow streams: Asset A generates $4 at t=1, $3 at t=2, and $10 at t=3. Asset B generates $2 at t=1, $X at t=2, and $10 at t=3. Suppose X=6 and the interest rate r is constant. For r=0.1, calculate the present value of the two assets. Determine the set of all interest rates {r} such that asset A is more valuable than asset Draw the present value of the assets as a function of the interest rate. Suppose r=0.2. Find the value X such that the present value of asset B is 12. Suppose the (one-period) interest rates are variable and given as follows: r01=0.1,r12=0.2, r23=0.3. Calculate the yield to maturity of asset A. (You can use Excel or ascientific calculator to find the solution numerically.)On the statement of cash flows, which of the following items is classified as a financingactivity?a. Borrowing cash by signing a long-term noteb. Purchasing investments with cashc. Acquiring long-term assets with cashd. Loaning money with a short-term note receivableValue of a mixed stream For the mixed stream of cash flows shown in the following table, . determine the future value at the end of the final year if deposits are made into an account paying annual interest of 11%, assuming that no withdrawals are made during the period and that the deposits are made: a. At the end of each year. b. At the beginning of each year. a. The future value at the end of the final year if deposits are made at the end of each year is $. (Round to the nearest dollar)
