The Time Value of Money (TRUE/FALSE)
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The larger the rate of interest, the smaller is the future value of a dollar.
False
A series of equal payments is called an annuity.
True
Compounding refers to the earning of interest on interest earned previously.
True
If a bank pays 2 percent compounded daily, the true rate of interest is greater than 2 percent.
True
If interest rates are 0 percent, an annuity of $100 for ten years is the same as $1,000 today.
True
The concept of the time value of money is a means to bring together the present and the future.
True
The future value of an annuity of $100 at 6 percent for ten years exceeds $1,000.
True
The present value of an annuity increases as the number of years increases.
True