Chapter 5--Time Value of Money
Cash flows or Free Cash Flows (FCF) can appear as: a. PV and FV b. PV, FV, and PMT(s) c. PV and PMT(s) d. FV and PMT(s) e. All of the above
e
In any Time Value of Money (TVM) related problem the following variables are always present a. PV, PMT, FV, n, i b. PV, FV, n, i c. PV, PMT, n, i d. FV, PMT, n, i e. None of the above
e
Compound interest is interest earned on the ______ principal and the _______ ________ from prior periods
initial, interest reinvested
Compounding is the same as earning _________ on interest
interest
One dollar today is worth _________ than one dollar tomorrow.
more
Simple interest is interest earned only on the __________ _________ invested.
original principle
Compounding is _________ the _________ earned on an asset.
reinvesting, interest
Future Value (FV) is the amount an investment (or an asset) is worth _______________.
sometime in the future/one or more periods
In Excel NPER stands for rate and RATE for number of periods
False
In Excel RATE stands for interest rate or return
True
Present Value (PV) is: _________ _________ of future cash flows discounted at an appropriate discount rate.
current value