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Test Bank for Corporate Finance 13th Edition By Stephen Ross, Randolph Westerfield, Jeffrey Jaffe,Doctor ian Since individuals are always confronted with opportunities to earn positive rates of return on their funds, the timing of cash flows does not have$17.99
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Test Bank for Corporate Finance 13th Edition By Stephen Ross, Randolph Westerfield, Jeffrey Jaffe,Doctor ian Since individuals are always confronted with opportunities to earn positive rates of return on their funds, the timing of cash flows does not have
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Course
Corporate Finance 13th Edition By St
Institution
Corporate Finance 13th Edition By St
Test Bank for Corporate Finance
13th Edition By Stephen Ross,
Randolph Westerfield, Jeffrey
Jaffe,Doctor ian
Since individuals are always confronted with opportunities to earn positive rates of
return on their funds, the timing of cash flows does not have any significant economic
consequences...
Test Bank for Corporate Finance
13th Edition By Stephen Ross,
Randolph Westerfield, Jeffrey
Jaffe,Doctor ian
Since individuals are always confronted with opportunities to earn positive rates of
return on their funds, the timing of cash flows does not have any significant economic
consequences.(t or f) - <<answers>>FALSE
Time value of money is based on the belief that a dollar that will be received at some
future date is worth more than a dollar today.(t or f) - <<answers>>FALSE
For a given positive interest rate, the future value of $100 increases with the passage of
time. Thus, the longer the period of time, the greater the future value.(t or f) -
<<answers>>TRUE
Future value is the value of a future amount at the present time, found by applying
compound interest over a specified period of time.(t or f) - <<answers>>FALSE
The greater the interest rate and the longer the period of time, the higher the present
value.(t or f) - <<answers>>F
Everything else being equal, the higher the interest rate, the higher the future value.(t or
f) - <<answers>>T
Future value increases with increases in the interest rate or the period of time funds are
left on deposit. (t or f) - <<answers>>T
Everything else being equal, the higher the discount rate, the higher the present value.
(t or f) - <<answers>>F
,Everything else being equal, the longer the period of time, the lower the present value
(true or false) - <<answers>>T
________ is the amount earned on a deposit that has become the part of the principal
at the end of a specified time period.
A) Discount interest
B) Compound interest
C) Primary interest
D) Future value - <<answers>>B) Compound interest
The future value of $100 received today and deposited at 6 percent for four years is
________.
A) $126
B) $ 79
C) $124
D) $116 - <<answers>>A) $126
The future value of $200 received today and deposited at 8 percent for three years is
________.
A) $248
B) $252
C) $158
D) $200 - <<answers>>B) $252
The present value of $100 to be received 10 years from today, assuming an opportunity
cost of 9 percent, is ________.
A) $236
B) $699
C) $ 42
D) $ 75 - <<answers>>C) $ 42
The amount of money that would have to be invested today at a given interest rate over
a specified period in order to equal a future amount is called ________.
A) future value
B) present value
C) future value of an annuity
D) compounded value - <<answers>>B) present value
The present value of $200 to be received 10 years from today, assuming an opportunity
cost of 10 percent, is ________.
, A) $ 50
B) $200
C) $518
D) $ 77 - <<answers>>D) $ 77
The future value of a dollar ________ as the interest rate increases and ________ the
further in the future an initial deposit is to be received.
A) decreases; decreases
B) decreases; increases
C) increases; increases
D) increases; decreases - <<answers>>C) increases; increases
The annual rate of return is referred to as the ________.
A) discount rate
B) marginal rate
C) risk-free rate
D) marginal cost - <<answers>>A) discount rate
If you expect to retire in 30 years, live on $50,000 per year and expect the inflation to
average 3% over the next 30 years, what amount of annual income will you need to live
at the same comfort level in 30 years?
A) $121,363
B) $$95,000
C) $20,599
D) $51,500 - <<answers>>A) $121,363
Calculate the future value of $4,600 received today if it is deposited at 9 percent for
three years. - <<answers>>FV = PV (1+ r)n = $4,600(1.09)3 = $5,957
Calculate the present value of $89,000 to be received in 15 years, assuming an
opportunity cost of 14 percent. - <<answers>>PV = 89,000(1.14)-15 = $12,469
An annuity due is an amount that occur at the beginning of each period. (t or f) -
<<answers>>T
An ordinary annuity is an annuity in which cash flows occur at the beginning of each
period. (t or f) - <<answers>>F
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