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

Answers

1.       False

2.       D

3.       B

4.       C

5.       True

6.       True

7.       False

8.       True