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Flashcards in Chp3-Quiz Deck (13):
1

An increase in risk should carry with it an increase in return

TRUE

2

Ellen Hopkins is saving for a new car that costs $34,000. Approximately how many money must Ellen set aside now to have $34,000 in 3 years if the annual compound interest rate is 8%

26990

3

Jaker Cherson is saving for a new tractor that costs $60,000. Approximately, how much money must he set aside now to have $60,000 in 5 years if the annual compound interest rate is 10%.

37255

4

In every case, with total returns being equal, the investment which provides cash flow sooner is the superior choice

TRUE

5

Which of the following decreases the present value

Increasing discount rate

6

Lily Jones places $10,000 in a savings account that compounds interest at 4%. How much money will she have in 5 years.

12167

7

Compounding is the opposite of discounting

TRUE

8

By selecting the proportions of debt and equity in the most efficient way, a manager can add value to the firm.

TRUE

9

The present value equation is a rearrangement of the future value equation.

TRUE

10

Bruce Sterling places $5,000 in a savings account that compounds interest at 8%. How much money will Bruce have in 10 years?

10795

11

Present Value Formula

Future Value / (1 + i)^n

12

Future Value Formula

(1 + i)^n x initial investment

13

Initial Investment Formula

FV/(1 + i)^n