Quiz Ch 05 – Identifying Ordinary Annuities and Perpetuities
Essentials of Corporate Finance
Ross, Westerfield, and Jordan
10th Edition
What represents an ordinary annuity but not a perpetuity?
What represents an ordinary annuity but not a perpetuity?
What type of loan is it when Scott borrows $2,500 at an APR of 7.4 percent and is required to repay $2,685 in a single payment after one year?
What type of loan did you obtain if you borrowed $3,000 from your bank and agreed to repay the interest annually while paying the principal at the end of three years?
What is the term used to describe the interest earned on both the initial principal and the interest reinvested from prior periods?
Jared invested $100 two years ago at 8 percent interest and reinvested the interest earned in the first year. In the second year, he earned an additional $8.64 in interest. What is the term used to describe the extra $.64 he earned in interest?
Cullen invested $5,000 five years ago and earns 6 percent annual interest. By keeping his interest earnings in the account, what is the term used to describe how his investment grows over time?
Miles invested $5,000 ten years ago with the expectation of having $10,000 today, but due to compound interest reinvestment, he only has $8,400. Which statement is necessarily true?
What can be inferred about Nirav’s savings account if he just opened an account with a 2 percent interest rate, compounded annually, and it will be worth $5,000 after four years with no additional deposits or withdrawals?
If Caroline will receive an award of $20,000 in six years, and Jiexin will receive an award of $20,000 in nine years, which statement is true if both apply a discount rate of 7 percent?
If your aunt has promised to give you $5,000 upon your college graduation in three years and you speed up your plans to graduate in two years, what will happen to the present value of the gift?