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- Present value isa. the value now of a future amount.b. the amount that must be invested now to produce a known future value.c. always smaller than the future value.d. all of these.Present value represents: (LO C-2) a. The value today of receiving money in the future. b. The amount that an investment today will grow to be in the future. c. The difference between the initial investment and the growth of that investment over time. d. A series of equal payments.#7 For context NPV is net present value, IRR is internal rate of return, and ARR is accounting rate of return 3 c Known Amt. ? ? Known Amt. ? Known Amounts What is this chart? What is this chart? What is this chart? What is this chart? ? Known Amounts Describe Compound Interest. What do we mean when we say "discounting"? What are the reasons for using the PVA table? How do NPV and IRR differ from Payback Period and ARR?
- 6. When calculating future value, the _____ the interest rate, the smaller the future value amount. a. smaller b. largerAn decrease in the interest rate will: Multiple select question. increase the future value decrease the present value decrease the future value increase the present valuesheet. _is the excess of resources (usually cash) received or paid over the amount of resources 1. loaned or borrowed. 2. is the interest paid on both the principal and the amount of interest accumulated in prior periods. 3. Future value interest factor (FVIF) is represented by the formula 4. An installment that requires a buyer to pay equal payments at a certain period is called. 5. _means that individuals maximize returns for a given level of risk or minimize risk if the returns are the same. 6. The basic decision rule is to accept the project if the net present value is 7. If the cash flow stream lasts forever or is indefinite, then it is called 8. If payment is made and interest is computed at the end of each payment interval, then it is called 9. One way to reduce risk to an acceptable level is through wherein you invest in different types of investments with different risks and returns. 10. If the cash flow happens at the beginning of each period, then it is called.
- dont use chatgpt answer The present value of a future amount: a. will always be less than the future amount b. can be calculated precisely if the discount rate and number of periods is known c. is worth less than the future value d. both a. and b. above are trueWhich of these will increase the present value of an amount to be received sometime in the future? Group of answer choices Increase in the discount rate. Increase in the time until the amount is received. Decrease in the interest rate Decrease in the future valueK possible Risk-Free Rate. What is a risk-free rate? Give an example of an investment with a risk free rate. Why is there no risk? A risk-free rate is: (Select the best answer below.) OA. an interest rate that is not guaranteed on an investment for a specified period. OB. an interest rate guaranteed on an investment for a unspecified period. OC. an interest rate guaranteed on an investment for a specified period. OD. an interest rate that is not guaranteed on an investment for an unspecified period. There is no risk because a risk-free investment: (Select the best answer below.) OA. pays an interest rate guaranteed on an investment for an unspecified period. OB. would pay investors even if the financial institution went into bankruptcy. OC. is a checking account. OD. is a zero interest loan.
- Part A: Choose the correct option for each question (investments) A) increased, increased B) increased, decreased C) decreased, increased D) decreased, decreased E) No change, increased F) No change, decreased Question 1. In an investment, what effect does. decreasing the frequency of payments have on the total principal invested and on the interest paid? 2. In an investment, what effect does decreasing the payment amount have on the total principal invested and on the interest paid? 3. In an investment, what effect does decreasing the frequency of compound periods have on the total principal invested and on the interest paid? 4. In an investment, what effect does increasing the interest rate have on the total principal invested and on the interest paid? 5. In an investment, what effect does decreasing the interest rate have on the total principal invested and on the interest paid? Answer [Ex: E) No change, Increased)ion Given r and t greater than zero: I. Present value interest factors are less than one. II. Future value interest factors are less than one. III. Present value interest factors are greater than future value interest factors. IV. Present value interest factors grow as t grows, provided r is held constant. Select one: O a. II and Ill only Ob. II and IV only O c. I and III only O d. I only Oe. I and IV onlyA. Assume that the variables I, N, and PV represent the interest rate, investment or deposit period, and present value of the amount deposited or invested, respectively. Which equation best represents the calculation of a future value (FV) using: Compound interest? FV = (1 + I)NN / PV FV = PV / (1 + I)NN FV = PV x (1 + I)NN B. Simple interest? FV = PV + (PV x I x N) FV = PV - (PV x I x N) FV = PV / (PV x I x N) C. Identify whether the following statements about the simple and compound interest methods are true or false. Statement True False After the end of the second year and all other factors remaining equal, a future value based on compound interest will never exceed the future value based on simple interest. All other variables held constant, investments paying simple interest have to pay significantly higher interest rates to earn the same amount of interest as an account earning compound…