Quiz Ch 05 – Present Value Formula and Exponent
Fundamentals of Corporate Finance
Ross, Westerfield, and Jordan
13th Edition
What variable represents the exponent in the present value formula?
What variable represents the exponent in the present value formula?
When considering an annually compounded rate and the annual percentage rate (APR) calculated for loans with monthly payments under truth-in-lending laws, how are these two measures typically related?
To achieve a retirement goal of $2 million with a one-time lump-sum deposit, in which scenario can you deposit a smaller amount today: if you plan to retire sooner rather than later and earn a low or high rate of interest?
If $6,000 is deposited into a retirement savings account with an 8 percent annual interest rate compounded annually and no withdrawals will be made until retirement in 48 years, which statement is true?
True or false: An annuity factor illustrates the future value of a $1 investment made at the present time.
True or false: An annual percentage rate (APR) is calculated by compounding the rate on an annual basis.
True or false: To find the present value of an annuity due, you can multiply the present value of an ordinary annuity by the discount rate.
True or false: The effective annual interest rate CANNOT be lower than the annual percentage rate (APR).
True or false: The discount factor for five years is lower than that for four years.
True or false: Compound interest applies interest to the initial investment as well as the accumulated interest which has already been earned for each time period.