Chapter 5 Questions

Lulu Carrizales

Chapter 5 Questions.

1. Net Present Value is used to analyze the profitability of an investment or project. (T/F)
   
2. An annuity and an annuity due have all the same components. (T/F)
    
3. A Perpetuity is a payment that does not stop (T/F)
   
4. An Annuity is the exact same payment over a finite period of time. (T/F)
   
5. "IRR" stands for Interior Return Rate (T/F)
   
6. The difference between an Annuity and an Annuity Due is:
   a)  At which point in the period that they payment is due (beg. or end)
   b)  The payment amount
   c)  Both a and b
   d)  None of the above.
    
7. If you lend someone $10,500 with a 10% interest rate over 5 years, how much would your FV be?
   
   a)  16,900
   b)  15,910
   c)  16,910
   d)  15,900
   
8. A ______ payment is taken in lieu of reoccurring payments that would usually be received over a period of time.
   
   a)  annuity
   b)  perpetuity
   c)  lump sum
   d)  None of the above.

Key:
1.  T
2.  F
3.  T
4.  T
5.  F
6.  A
7.  C
8.  C