Quiz 05.08 – T/F Calculating Future Value
Intermediate Accounting
Spiceland, Nelson, and Thomas
10th Edition
Computing future value necessitates the exclusion of interest.
Computing future value necessitates the exclusion of interest.
Computing present value entails the exclusion of future interest from cash flows.
In an ordinary annuity, the initial payment is made or received on the contract’s commencement date.
The final payment in the future value of an ordinary annuity does not accrue interest.
An annuity includes uniform principal payments along with interest on the outstanding balance.
An annuity due entails the payment or receipt of funds on the contract’s starting date.
An annuity involves making identical payments at regular intervals.
Annual payments of an ordinary annuity are lower or equal to those of an annuity due, when current amounts owed and interest rates are identical.
When all else is equal, the present value of an annuity due is lower than the present value of an ordinary annuity.
In a deferred annuity, interest accrual is postponed for a specified duration.