Chapter 9 - True/False
The farther into the future any given amount is received, the larger its present value.
False
The interest factor for the future value of a single sum is equal to (1 + n)i.
False
An annuity is a series of consecutive payments of equal amount.
True
Compounding refers to the growth process that turns $1 today into a greater value several periods in the future.
True
Higher interest rates (discount rates) reduce the present value of amounts to be received in the future.
True
The amount of annual payments necessary to repay a mortgage loan can be found by reference to the present value of an annuity table.
True
The interest factor for the present value of a single amount is the reciprocal of the future value interest factor.
True
The present value of an annuity table provides a "shortcut" for calculating the future value of a steady stream of payments, denoted as A. The same value can be calculated directly from the following equation: PVa-A[1/(1-i)]^1+...
True
The time value of money concept is fundamental to the analysis of cash inflow and outflow decisions covering multiple periods of time.
True
