财务管理-CHAPTER-6

CHAPTER6DiscountedCashFlowValuationI.DEFINITIONSANNUITYa1.Anannuitystreamofcashflowpaymentsisasetof:a.levelcashflowsoccurringeachtimeperiodforafixedlengthoftime.b.levelcashflowsoccurringeachtimeperiodforever.c.increasingcashflowsoccurringeachtimeperiodforafixedlengthoftime.d.increasingcashflowsoccurringeachtimeperiodforever.e.arbitrarycashflowsoccurringeachtimeperiodfornomorethan10years.PRESENTVALUEFACTORFORANNUITIESb2.Thepresentvaluefactorforannuitiesiscalculatedas:a.(1+presentvaluefactor)r.b.(1–presentvaluefactor)r.c.presentvaluefactor+(1r).d.(presentvaluefactorr)+(1r).e.r(1+presentvaluefactor).FUTUREVALUEFACTORFORANNUITIESd3.Thefuturevaluefactorforannuitiesiscalculatedasthe:a.futurevaluefactor+r.b.(1r)+(futurevaluefactorr).c.(1r)+futurevaluefactor.d.(futurevaluefactor–1)r.e.(futurevaluefactor+1)r.ANNUITIESDUEe4.Annuitieswherethepaymentsoccurattheendofeachtimeperiodarecalled_____,whereas_____refertoannuitystreamswithpaymentsoccurringatthebeginningofeachtimeperiod.a.ordinaryannuities;earlyannuitiesb.lateannuities;straightannuitiesc.straightannuities;lateannuitiesd.annuitiesdue;ordinaryannuitiese.ordinaryannuities;annuitiesduePERPETUITYc5.Anannuitystreamwherethepaymentsoccurforeveriscalleda(n):a.annuitydue.b.indemnity.c.perpetuity.d.amortizedcashflowstream.e.amortizationtable.STATEDINTERESTRATESa6.Theinterestrateexpressedintermsoftheinterestpaymentmadeeachperiodiscalledthe_____rate.a.statedinterestb.compoundinterestc.effectiveannuald.periodicintereste.dailyinterestEFFECTIVEANNUALRATEc7.Theinterestrateexpressedasifitwerecompoundedonceperyeariscalledthe_____rate.a.statedinterestb.compoundinterestc.effectiveannuald.periodicintereste.dailyinterestANNUALPERCENTAGERATEb8.Theinterestratechargedperperiodmultipliedbythenumberofperiodsperyeariscalledthe_____rate.a.effectiveannualb.annualpercentagec.periodicinterestd.compoundintereste.dailyinterestPUREDISCOUNTLOANd9.Aloanwheretheborrowerreceivesmoneytodayandrepaysasinglelumpsumatsometimeinthefutureiscalleda(n)_____loan.a.amortizedb.continuousc.balloond.purediscounte.interest-onlyINTEREST-ONLYLOANe10.Aloanwheretheborrowerpaysinteresteachperiodandrepaystheentireprincipaloftheloanatsomepointinthefutureiscalleda(n)_____loan.a.amortizedb.continuousc.balloond.purediscounte.interest-onlyAMORTIZEDLOANa11.Aloanwheretheborrowerpaysinteresteachperiod,andrepayssomeoralloftheprincipaloftheloanovertimeiscalleda(n)_____loan.a.amortizedb.continuousc.balloond.purediscounte.interest-onlyBALLOONLOANc12.Aloanwheretheborrowerpaysinteresteachperiod,repayspartoftheprincipaloftheloanovertime,andrepaystheremainderoftheprincipalattheendoftheloan,iscalleda(n)_____loan.a.amortizedb.continuousc.balloond.purediscounte.interest-onlyII.CONCEPTSORDINARYANNUITYVERSUSANNUITYDUEc13.Youarecomparingtwoannuitieswhichoffermonthlypaymentsfortenyears.Bothannuitiesareidenticalwiththeexceptionofthepaymentdates.AnnuityApaysonthefirstofeachmonthwhileannuityBpaysonthelastdayofeachmonth.Whichoneofthefollowingstatementsiscorrectconcerningthesetwoannuities?a.Bothannuitiesareofequalvaluetoday.b.AnnuityBisanannuitydue.c.AnnuityAhasahigherfuturevaluethanannuityB.d.AnnuityBhasahigherpresentvaluethanannuityA.e.Bothannuitieshavethesamefuturevalueasoftenyearsfromtoday.UNEVENCASHFLOWSANDPRESENTVALUEb14.Youarecomparingtwoinvestmentoptions.Thecosttoinvestineitheroptionisthesametoday.Bothoptionswillprovideyouwith$20,000ofincome.OptionApaysfiveannualpaymentsstartingwith$8,000thefirstyearfollowedbyfourannualpaymentsof$3,000each.OptionBpaysfiveannualpaymentsof$4,000each.Whichoneofthefollowingstatementsiscorrectgiventhesetwoinvestmentoptions?a.Bothoptionsareofequalvaluegiventhattheybothprovide$20,000ofincome.b.OptionAisthebetterchoiceofthetwogivenanypositiverateofreturn.c.OptionBhasahigherpresentvaluethanoptionAgivenapositiverateofreturn.d.OptionBhasalowerfuturevalueatyear5thanoptionAgivenazerorateofreturn.e.OptionAispreferablebecauseitisanannuitydue.UNEVENCASHFLOWSANDFUTUREVALUEa15.Youareconsideringtwoprojectswiththefollowingcashflows:ProjectAProjectBYear1$2,500$4,000Year23,0003,500Year33,5003,000Year44,0002,500Whichofthefollowingstatementsaretrueconcerningthesetwoprojects?I.Bothprojectshavethesamefuturevalueattheendofyear4,givenapositiverateofreturn.II.Bothprojectshavethesamefuturevaluegivenazerorateofreturn.III.Bothprojectshavethesamefuturevalueatanypointintime,givenapositiverateofreturn.IV.ProjectAhasahigherfuturevaluethanprojectB,givenapositiverateofreturn.a.IIonlyb.IVonlyc.IandIIIonlyd.IIandIVonlye.I,II,andIIIonlyPERPETUITYVERSUSANNUITYd16.Aperpetuitydiffersfromanannuitybecause:a.perpetuitypaymentsvarywiththerateofinflation.b.perpetuitypaymentsvarywiththemarketrateofinterest.c.perpetuitypaymentsarevariablewhileannuitypaymentsareconstant.d.perpetuitypaymentsnevercease.e.annuitypaymentsnevercease.ANNUALPERCENTAGERATEe17.Whichoneofthefollowingstatementsconcerningtheannualpercentagerateiscorrect?a.Theannualpercentagerateconsidersinterestoninterest.b.Therateofinterestyouactuallypayonaloaniscalledtheannualpercentagerate.