MGMT 310 - Chapter 6 Homework Questions

The variables in a present value of a lump sum problem include all of the following, except: A. Present Value B. Time period C. Interest rate D. Free Cash Flow

D

A common error made when solving a future value of an annuity problem is: A. Using factor tables to help solve the problem. B. Dividing the annual deposit by the number of years before calculating the problem. C. Using a financial calculator to help solve the problem. D. Multiplying the number of years and the interest rate before calculating the problem. E. Multiplying the annual deposit and the number of years before calculating the problem.

E

A perpetuity is defined as: A. a limited number of equal payments paid in even time increments. B. unending equal payments paid at either equal or unequal time intervals. C. payments of equal amounts that are paid irregularly but indefinitely. D. varying amounts that are paid at even intervals forever. E. unending equal payments paid at equal time intervals.

E

How would a decrease in the interest rate effect the future value of a lump sum, single amount problem (all other variables remain the same)? A. Increase the time needed to save. B. Increase the present value. C. Decrease the present value. D. Increase the future value. E. Decrease the future value.

E

The variables in a future value of an annuity problem include all of the following, except: A. Future Value B. Payments C. Time period D. Interest rate E. Volatility

E

Which loan type requires the borrower to repay a single lump sum payment at some time in the future with interest? A. Interest-only B. Monthly Amortized C. Annual Amortized D. Future Payment E. Pure Discount

E

The variables in a future value of an annuity problem include all of the following, except: A. Usage B. Future Value C. Payments D. Time period E. Interest rate

A

Which loan type requires calls for the borrower to pay interest each period and to repay the entire principal at some point in the future? A. Interest-only B. Monthly Amortized C. Annual Amortized D. Future Principal E. Pure Discount

A

How would a decrease in the interest rate effect the present value of a lump sum, single amount problem (all other variables remain the same)? A. Increase the time needed to save. B. Increase the present value. C. Change the future value. D. Decrease the present value.

B

How would an increase in the interest rate effect the present value of an annuity problem (all other variables remain the same)? A. Increase the time needed to save. B. Decrease the present value. C. Increase the present value. D. Change the future value.

B

The variable that you are solving for in a future value of an annuity problem is: A. Present value B. Future value C. Time period D. Interest rate E. Payments

B

The variables in a future value of a lump sum problem include all of the following, except: A. Future Value B. Payments C. Time period D. Interest rate

B

The variables in a present value of an annuity problem include all of the following, except: A. Time period B. Risk Profile C. Interest rate D. Payments

B