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which of the following statements are correct given a constant interest rate and constant giver year period of time?
1) An increase in the future values causes the present value to declines
2) An increase in the
3) There is inverse relationship between the present value and future value
4) There is a direct relationship between the present value and the future value
a) 2 and 3 only
b) 2 and 4 only
c) 1 and 3 only
d) 1 and 4 only
e) 1 only
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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 FalseWhich of the following statements is true? Select one of the options i. – iii.As the number of compounding periods increases, the value of the AnnualPercentage Rate (APR)i. increases and is higher than the nominal rate of interestii. equals to the nominal rate of interestiii. increases and is lower than the nominal rate of interest.The time value of money takes all of the following into consideration EXCEPT a.Inflation b.the number of compounding periods per year c.The total number of years d. the present value of money
- 2 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.For each of the following, compute the future value: Present Value Years Interest Rate Future Value $ 2,250 4 18% 9,310 9 6 76,355 15 12 183,796 21 8Find the interest rate implied by the following combinations of present and future values. present values $330, Years 10, future value 591, interest rate? present values $148, Years 3, future value 192, interest rate? present values $230, Years 6, future value 230, interest rate?
- If the discounting rate decreases and the no of years increases what will be the impact on future value and present value?In an inflationary period, what is the difference between (a) inflated dollars and “then-current” future dollars, and (b) “then-current” future dollars and constant-value future dollars?Calculate Present Values For each of the following, compute the present value: Present Value Years Interest Rate Future Value 6 7% $13,827 11 15 43,852 19 11 725,380 29 18 590,710
- The Fisher equation tells us that the real interest rate approximately equals the nominal rate minus the inflation rate. Suppose the inflation rate increases from 3% to 5%. Does the Fisher equation imply that this increase will result in a fall in the real rate of interest? Explain.The yield curve indicates that the two-year interest rate will be a function of what variables? Include in your answer an explanation of how changes in these variables will affect the two-year interest rate.For each of the following situations involving single amounts, solve for the unknown (?). Assume that interest is compounded annually. (i = interest rate, and n = number of years) Present Value Future Value i n1. ? $ 40,000 10% 52. $ 36,289 65,000 ? 103. 15,884 40,000 8 ?4. 46,651 100,000 ? 85. 15,376 ? 7 20