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ALL True or False Qustion
1. In general, annually compounded interest rate will result in more interest payments over multiple years than simple interest rate?

2. The (1+i)n if called compounding amount factor?

3. The 1/(1+i)n is called sinking fund factor?

4. An amount of $100 today will be more than $100 in 5 years from now with any interest rate?

5. An amount of $100 5 years from now with any interest rate will be more than $100 today?

6. The interest and interest rate are same terms and amounts?

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Darryn D'Souza
Darryn D'SouzaLv10
28 Sep 2019
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Related questions

1 Two sets of cash flows are shown in the table below. If these sets are equal at 8% interest rate, determine the unknown value, X.

Year 0 1 2 3 4 5
Cash Flow, Series I $125 $100 $75 $50 $25 $0
Cash Flow, Series II $X $2X $3X $4X $5X $7X

2 A deposit of $10,000 now at a interest rate of 10% per year will accumulate in 20 years to an amount equal to _______________.

A.

$54,600
B.

$61,500
C.

$67,280
D.

$51,900

3 Which of the following relationships between compound interest factors is not correct?

A.

Single Payment Compound Amount Factor and Single Payment Present Worth Factor are reciprocals.
B.

Sinking Fund Factor and Uniform Series Compound Amount Factor are reciprocals.
C.

Capital Recovery Factor and the Sinking Fund Factor are reciprocals.
D.

Capital Recovery Factor and Uniform Series Present Worth Factor are reciprocals.

4 What is the present worth of a series of ten deposits of $200 per year at 6% made at the end of each year?

A.

$1,672
B.

$1,072
C.

$1,272
D.

$1,472

5 Determine the net present worth (NPW) of the following cash flows using an interest rate of 7%.

Year

0

1

2

3

4

5

6

7

8

Cash Flow,$

-12,000

2,000

2,000

2,000

2,000

2,000

2,500

3,000

3,500

A.$2,771.05

B.$2,500
C.$1,500
D.$1,771.05

6 At Kal Tech Manufacturing Inc, the time required to make the first unit of an engineered product is 64.1 minutes. Determine the time required for 16th unit if the learning curve percentage is 90%.

A.

42.1 minutes
B.

29.53 minutes
C.

36.45 minutes
D.

20.89 minutes

7 A sum of $994.62 deposited at time

17) A $50,000 municipal bond has an interest rate of 6% per year, compounded semiannually. The bond will mature in 10 years. If the market interest rate is 8% per year compounded semiannually, a person purchasing the bond should be willing to pay:

a. An amount less than $50,000

b. $50,000

c. An amount greater than $50,000

d. The amount cannot be determined from the information provided

18) Two mutually exclusive alternatives, A and B, are to be evaluated by the ROR method. The initial investment for alternative B is greater than that of alternative A. If the overall ROR of both alternatives A, and B, is greater than the MARR, then:

a. Select alternative A because it has a lower initial investment cost.

b. Select alternative B because it has a higher initial investment cost.

c. Conduct an incremental analysis and select A if the ROR of the increment exceeds the MARR

d. Conduct an incremental analysis and select B if the ROR on the increment exceeds the MARR.

19) A person purchases a $5,000, 5% per year bond, with interest payable semiannually, for the amount of $4,000. The bond has a maturity date of 14 years from now. The equation for calculating how much the person must sell the bond for 6 years from now in order to make a rate of return of 12% per year, compounded semiannually, is:

a. 0 = 4,000 + 125(P/A,6%,12) + x(P/F,6%,12)

b. 0 = 4,000 + 100(P/A,6%,12) + x(P/F,6%,12)

c. 0 = 5,000 + 125(P/A,6%,12) + x(P/F,6%,12)

d. 0 = 4,000 + 125(P/A,12%,6) + x(P/F,12%,6)

20) How much must you deposit in your retirement account each year for 10 years starting now (i.e., years 0 through 9) if you want to be able to withdraw $50,000 per year forever beginning 30 years from now? Assume the account earns interest at 10% per year.

a. $4,239

b. $4,662

c. $4,974

d. $5,471

The following are all True and False Questions:

1. Book Value represents the remaining underpreciated investment on the books after the depreciation charges to date have been subtracted

2. For the same interest rate, compounding interest does not always yield a larger future worth value than a simple interest rate

3. For any project, if its present worth is negative, the project will be rejected

4. The capatalized cost of a finite-life alternative can be obtained by calculating its annual worth over one life cycle and then multiplying by the interest rate

5. The depreciation amount is not directly included in CFBT (Cash Flow Before Tax), but depreciation is directly invlolved in the taxable calculation

6. Using incremental analysis of alternatives, the alternatice with the highest B/C ratio is selected.

7. Plotting PW vs i can be used to determine the IRR for a given project.

8. In conducting an incremental analysis, at any round, two alternatives can be compared and the alternative with the highest internal rate of return can be selected for comparison in the next round.

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