chapter 5 Blog post Houa Vang

1) What is a present value?
a) rate of return that exactly equates the ivestment outflow with the investment inflow.
b) the value an anticipated future income.
c) equal payment over it life.
d) the interest earned on invested capital.

2) What's the present value of $100 to be received 1 year from now at a rate of return of 5%?
a) $105.23
b) $95.23
c) $80.23
d) $100.23

3) You have $300 today and what will be present value will grow in 10 year with a 5% annual rate return.
a) $642.79
b) $542.79
c) $842.79
d) $742.79

4) (T/F) Same problem number (3) if invested $1000 instead of the $300 with the same annual rate and year I will get $2,475.

5) (T/F) Discounting is the process of determining the future value of an income stream by applying appropriate time value of money concepts.

6) (T/F) Annuity is a specific types of income stream characterized by equal periodic payment over a life.

7) (T/F) A mortgagor and a mortgage are the same and both are a real estate lender.

8) (T/F) A amorization is the systematic reduction of scheduled principal payment that lead eventually to the complete extinction of the loan.

1) b
2) b
3) d
4) T
5) F
6) T
7) F
8) T