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- With a zero interest rate both the present value and the future value of an N payment annuity would equal N x payment true or false?1. Which statement is FALSE? A. Future value annuity is an example of annuity. B. A perpetuity is an annuity that has maturity period. C. An annuity is a series of equal payment made for a specified number of years. D. Ordinary annuity is an annuity in which the cash flows occur at the end of each period.The future value of an ordinary annuity for any given interest rate and number of periods is always less than the future value of an annuity due for the same interest rate and number of periods. True or False?
- 19. 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.For any investment, which will always have the higher future value : an ordinary annuity or an annuity due? For any debt, which will always have a higher future value: an ordinary annuity or an annuity due?1. How is the future value related to the present value of a single sum? 2. How is the present value of a single sum related to the present value of an annuity? 3. Why does money have a time value? 4. Does inflation have anything to do with making a dollar today worth more than a dollar tomorrow? 5. What is a deferred annuity?
- The Present Value of an Ordinary Annuity is identical to the Present Value of an Annuity Due. This statement is : a Indeterminate. b True. c False. d None of the abov2 Given a set of present value tables, an annual interest rate, the dollar amount of equal payments made, and the number of semiannual payments, what other information is necessary to calculate the present value of the series of payments? A. The future value of the annuity. B. The timing of the payments (whether they are at the beginning or end of the period). C. The rate of inflation. D. No other information is required.Why does an annuity due always have a higher future value than an ordinaryannuity?
- 20. What is X in the formula: FV = X(1+r) ? Select one: a. The future value of an annuity with X cash flows b. The present value of a single cash flow in one period's time c. The future value of a single cash flow in one period's time d. The present value of an annuity with X cash flowsThe 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.)In the present value of an annuity due table, the factors ________. Group of answer choices decrease as the interest rates increase, given a set number of periods decrease as the periods increase, given a set interest rate increase as the periods decrease, given a set interest rate increase as the interest rates increase, given a set number of periods