FIN 3000 Test 2

increase the present value

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)?

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decrease the future value

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)?

decrease the present value

how would an increase in the interest rate effect the present value of an annuity problem (all other variables remain the same)?

simple interest

interest rate x time period x principal

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multiplying the annual deposit and the number of years before calculating the problem

a common error made when solving a future value of an annuity problem is:

future value

simple interest + principal

payments & annuity payments

the variables in a future value of a lump sum problem do not include...

payments & free cash flow

the variables in a present value of a lump sum problem do not include..

source of funds & risk profile

the variables in a present value of an annuity problem do not include...