Quiz Ch 05 – T/F Discount Factor’s Role in Present Value Calculation
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
True or false: The discount factor is employed to assess the present value of receiving $1 in year t.
True or false: The discount factor is employed to assess the present value of receiving $1 in year t.
True or false: Discounting both real and nominal cash flows at the real interest rate is crucial.
True or false: Paying a loan more frequently can potentially reduce the annual percentage rate (APR) paid on the loan.
True or false: Comparing cash flows at different times without first discounting them to a common date is not advisable.
True or false: As time passes, in a fixed-rate mortgage, the share of each payment dedicated to interest decreases.
True or false: Present values can be determined by dividing the cash flow by a relevant discount factor.
True or false: The present value of an annuity due must be as great as that of an equivalent ordinary annuity.
True or false: In compound interest investments, the growth rate aligns with the interest rate.
True or false: In the presence of positive inflation, the nominal interest rate exceeds the real interest rate.
True or false: Under positive interest rates, the future value will consistently surpass the present value regardless of the time period.