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