Monday, February 25, 2013

Chapter 5 Questions by Arianna Sandoval

1.       A mortgagor is a real estate lender. T/F
2.       ____is the discounted value of an income-producing asset considering both cash inflows to the asset owner and cash outflows from the asset owner.
a)      Amortization
b)      Future Value
c)       Net Present Value
d)      Present Value
3.       ___ is when you want to compound the value of some amount of money today other than a single amount into the future?
a)      Present Value
b)      Lump Sum
c)       Annuity
d)      Net Present Value
4.       If you invest 100,000 today at 7.5% what will that investment be worth in 10 years?
a)      $106,115.16
b)      $200,103.20
c)       $206,103.16
d)      $-206,103.16
5.       The most important part of time value calculations is the time and interest rate. T/F
6.       Discounting is the process of determining the present value of a payment that is to be received in the future. T/F
7.       Receiving payment at the end of a period is also referred to as an ordinary annuity. T/F
8.       There are several problems with the IRR as a measure of return which includes not being able to tell you about the risk of the investment. T/F

1.       False
2.       D
3.       B
4.       C
5.       True
6.       True
7.       False
8.       True

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