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Question 1 As the compounding rate becomes lower and lower the future value of inflows approaches: A. 0. B. the present value of the inflows. C. infinity. D. Need more information. Question 2 If you invest $8000 at 12% interest how much will you have in 7 years? A. $18016 B. $3616 C. $17688 D. $80712 Question 3 The concept of time value of money is important to financial decision making because: A. it emphasizes earning a return on invested capital. B. it recognizes that earning a return makes $1 worth more today than $1 received in the future. C. it can be applied to future cash flows in order to compare different streams of income. D. all of the above Question 4 As the discount rate becomes higher and higher the present value of inflows approaches: A. 0. B. minus infinity. C. plus infinity. D. Need more information.

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