Multiple Choice Questions for Chapter 5

Multiple Choice Questions

The interest payment in an amortization schedule is calculated from?

a)Ending Balance

b)Beginning Balance

c)Principal

d)Payment

A specific type of income stream characterized by equal periodic payments over its life is called what?

a)Principal

b)IRR

c)NPV

d)Annuity

Another term for a real estate borrower is called what?

a)Mortgagee

b)Mortgagor

c)Developer

d)Realtor

True/False Questions

According to time value of money, receiving a dollar in 3 years from now is better than a year from now.

- True

- False

IRR defines the discount rate where the NPV equals 0.

- True

- False

Always accepting a positive PV.

- True

- False

The annuity in an amortization schedule is variable.

- True

- False

NPV and IRR are used to make investment decisions.

- True

- False

Solutions

b) d) b)

False, True, True, False, True