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ACC 303 WEEK 10 QUIZ 7

ACC 303 Week 10 Quiz 7 – STR NEW

ACC 303 Week 10 Quiz 7

All Questions Included.

TRUE-FALSE—Conceptual

1. The time value of money refers to the fact that a dollar received today is worth less than a dollar promised at some time in the future.

2. Interest is the excess cash received or repaid over and above the amount lent or borrowed.

3. Simple interest is computed on principal and on any interest earned that has not been withdrawn.

4. Compound interest, rather than simple interest, must be used to properly evaluate long- term investment proposals.

5. Compound interest uses the accumulated balance at each year end to compute interest in the succeeding year.

6. The future value of an ordinary annuity table is used when payments are invested at the beginning of each period.

7. The present value of an annuity due table is used when payments are made at the end of each period.

8. If the compounding period is less than one year, the annual interest rate must be converted to the compounding period interest rate by dividing the annual rate by the number of compounding periods per year.

9. Present value is the value now of a future sum or sums discounted assuming compound interest.

10. The future value of a single sum is determined by multiplying the future value factor by its present value.

11. In determining present value, a company moves backward in time using a process of accumulation.

12. The unknown present value is always a larger amount than the known future value because dollars received currently are worth more than dollars to be received in the future.

13. The rents that comprise an annuity due earn no interest during the period in which they are originally deposited.

14. If two annuities have the same number of rents with the same dollar amount, but one is an annuity due and one is an ordinary annuity, the future value of the annuity due will be greater than the future value of the ordinary annuity.

15. If two annuities have the same number of rents with the same dollar amount, but one is an annuity due and one is an ordinary annuity, the present value of the annuity due will be greater than the present value of the ordinary annuity.

16. The number of compounding periods will always be one less than the number of rents when computing the future value of an ordinary annuity.

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