The present value of a single sum is equal to the amount that, if invested today at the specified discount rate, would return the value of the single sum every year for a specified number of years. Select one: O True False
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- The future value of a present sum increases as either the discount rate or the number of periods per year increases, other things held constant. True FalseIncreasing the number of periods will increase all of the following except: Select one: A. The present value of an annuity B. The present value of $1 C. The future value of $1 D. The future value of an annuityIncreasing the number of periods will increase all of the following except Select one: a. the present value of $1. b. the future value of an annuity. c. the future value of $1.
- answer if its true or false 1) Based on the following information calculate the value at time 2 of the investment made at time zero. This future value is equal to 113. discount time investment (years) rate 6% 100 1Future value for an ordinary annuity and annuity due will be exactly the same if the investment horizon is exactly one year. Group of answer choices True FalseThe present value represents the amount of money you would have to deposit today in order to match what you would get from the income stream at the future date. The formula is Time = M = i Future value represents the total amount of money you would have if you deposit the income stream until a future date. The formula is To start our problem we need to identify the variables. Rate =r= i Income Stream S(t) = i Present Value = years % M 1. 0 S (t) et dt. Future Value = Present Value* erM dollars/year
- Need answer ASAP... Single-payment compound amount factor is the conversion factor that, when multiplied by F, yields the present amount P of future amount F after n years at interest rate i. a. The above statement is factual b. The above statement is misleading c. The above statement is incomplete d. All of the aboveFor question 1 parts a,b,c below, show all work that justifies your results. You will show how to use series to compare values of payments over time with a lump sum payment today. The value of future payments in terms of today's dollars is known as the present value of those payments. 1. a. What is the present value formula if annual payments of C dollars continue indefinitely, assuming an average annual interest rate r? Write the answer as a series using summation notation b. Rewrite the summation formula found in part a. as a geometric series, and then find the sum. The answer will be a fraction containing C and r. c. For annuities with a present value of $1 million, calculate the annual payouts given over 25 years assuming interest rates of 1%, 5%, and 10%. Use the formula you obtained in part b. There are three answers- one for each rate, measured in dollars. Round each answer to the nearest cent.You are comparing two annuities. Annuity A pays $115 at the end of each year for 5 years. Annuity B pays $105 at the beginning of each year for 5 years. The rate of return on both annuities is 12 percent. Which one of the following statements is correct given this information? Annuity B has both a higher present value and a higher future value than Annuity A. O Annuity A has both a higher present value and a higher future value than Annuity B. O Annuity A has the same present value and future value as Annuity B.
- PV = Cash Flow/Interest Rate is the present value shortcut formula for which of the following: * A perpetuity A single cash flow in the future A growing perpetuity An annuityThe present value of a perpetuity is equal to the payment on the annuity, PMT, divided bythe interest rate, I : PV = PMT/I. What is the future value of a perpetuity of PMT dollars peryear? (Hint: The answer is infinity, but explain why.)(TRUE or FALSE?) The PV of the ordinary annuity is larger than the PV of the annuity due because the cash flows of the annuity due are shifted forward one year and thus are discounted more.