Finance 300 exam 1 || All Solutions are Accurate.
Given an interest rate r, the Rule of 72 states that the time it will take for an investment to double
in value equals approx. 72/r, where r is expressed as a percentage. correct answers True
Converting an annuity to an annuity due decreases the present value. correct answers False
If a project's value is less than its required investment, then the project is attractive financially.
correct answers False
Any sequence of equally spaced, level cash flows is called an annuity. An annuity is also known
as a perpetuity. correct answers False
You should never compare cash flows occurring at different times without first discounting them
to a common date. correct answers True
To calculate present value, we discount the future value by some interest rate r, the discount rate?
correct answers True
For a given amount, the lower the discount rate, the less the present value. correct answers False
Financial markets and intermediaries allow investors and businesses to reduce and reallocate
risks. correct answers True
The opportunity cost of capital is the expected rate of return that shareholders can obtain in the
financial markets on investments with the same risk as the firm's capital investments. correct
answers True
The primary goal on any company should be to maximize current period profits. correct answers
False
Given an interest rate r, the Rule of 72 states that the time it will take for an investment to double
in value equals approx. 72/r, where r is expressed as a percentage. correct answers True
Converting an annuity to an annuity due decreases the present value. correct answers False
If a project's value is less than its required investment, then the project is attractive financially.
correct answers False
Any sequence of equally spaced, level cash flows is called an annuity. An annuity is also known
as a perpetuity. correct answers False
You should never compare cash flows occurring at different times without first discounting them
to a common date. correct answers True
To calculate present value, we discount the future value by some interest rate r, the discount rate?
correct answers True
For a given amount, the lower the discount rate, the less the present value. correct answers False
Financial markets and intermediaries allow investors and businesses to reduce and reallocate
risks. correct answers True
The opportunity cost of capital is the expected rate of return that shareholders can obtain in the
financial markets on investments with the same risk as the firm's capital investments. correct
answers True
The primary goal on any company should be to maximize current period profits. correct answers
False
