QUESTION 16 Consider the following statements and indicate whether they are true or false. For some of them, you will need to calculate the answers to confirm whether they are true or false A IR150 is lent at 12% pa simple interest, it yields R240 after 5 years A. True A Compounded interest is interest paid on previously earned interest plus the initial B. False principal amount C. True D. True E. True F. False A B. B. If R150 is invested at 12% pa compounded interest, it will yield R264,35 Straight line depreciation in accounting is similar to the compound interest concept You are provided with an interest rate of 12% per annum, the effective interest rate will be 12.45% A An annuity in which payments are made at the end of each period is an ordinary annuity B. A sinking fund is an example of the PV of an ordinary annuity here the first payment is made later than the G. True H. False 4
QUESTION 16 Consider the following statements and indicate whether they are true or false. For some of them, you will need to calculate the answers to confirm whether they are true or false A IR150 is lent at 12% pa simple interest, it yields R240 after 5 years A. True A Compounded interest is interest paid on previously earned interest plus the initial B. False principal amount C. True D. True E. True F. False A B. B. If R150 is invested at 12% pa compounded interest, it will yield R264,35 Straight line depreciation in accounting is similar to the compound interest concept You are provided with an interest rate of 12% per annum, the effective interest rate will be 12.45% A An annuity in which payments are made at the end of each period is an ordinary annuity B. A sinking fund is an example of the PV of an ordinary annuity here the first payment is made later than the G. True H. False 4
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:QUESTION 16
Consider the following statements and indicate whether they are true or false. For some of them, you will need to calculate the answers to confirm whether they are true or false.
IR150 is lent at 12% pa simple interest, it yields R240 after 5 years.
A. True
Compounded interest is interest paid on previously earned interest plus the initial B. False
principal amount
C. True
If R150 is invested at 12% pa compounded interest, it will yield R264,35
Straight line depreciation in accounting is similar to the compound interest
concept
A
A
A.
B.
B.
You are provided with an interest rate of 12% per annum, the effective interest
rate will be 12.45%
A.
An annuity in which payments are made at the end of each period is an ordinary
annuity
A sinking fund is an example of the PV of an ordinary annuity
A deferred annuity is an annuity where the first payment is made later than the
end of the first period
B.
A
D. True
E. True
F. False
G. True
H. False
Transcribed Image Text:QUESTION 13
The monthly mortgage payment on your house is R7 590.74 payable in advance. If it is a 20 year mortgage bond at 9% per annum compounded monthly, how much did you
borrow (rounded to the nearest Rand)?
OA.R906 345
B.R843 672
OC.R850 000
OD.R1 692 295
E. None of the above
Expert Solution
Step 1: Explain the present value
Present value refers to the current date valeu of the future cash flows and maturity amount discounted at interest rate for a period of time.
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