（完整版）财务管理CHAPTER6（20201018150641）CHAPTER 6Discounted Cash Flow ValuationI. DEFINITIONSANNUITYa 1. An annuity stream of cash flow payments is a set of:a. level cash flows occurring each time period for a fixed length of time.b. level cash flows occurring each time period forever.c. increasing cash flows occurring each time period for a fixed length of time.d. increasing cash flows occurring each time period forever.e. arbitrary cash flows occurring each time period for no more than 10 years.PRESENT VALUE FACTOR FOR ANNUITIESb 2. The present value factor for annuities is calculated as:a. (1 + present value factor) r.b. (1 -prese nt value factor) r.c. present value factor + (1 r).d. (present value factor r) + (1 r).e. r (1 + present value factor).FUTURE VALUE FACTOR FOR ANNUITIESd 3. The future value factor for annuities is calculated as the:a. future value factor + r.b. (1 r) + (future value factor r).c. (1 r) + future value factor.d. (future value factor -1) r.e. (future value factor + 1) r.ANNUITIES DUEe 4. Annuities where the payments occur at the end of each time period are called____ , whereas ____ refer to annuity streams with payments occurring at thebeginning of each time period.a. ordinary annuities; early annuitiesb. late annuities; straight annuitiesc. straight annuities; late annuitiesd. annuities due; ordinary annuitiese. ordinary annuities; annuities duePERPETUITYc 5. An annuity stream where the payments occur forever is called a(n):a. annuity due.b. indemnity.c. perpetuity.d. amortized cash flow stream.e. amortization table.STATED INTEREST RATESa 6. The interest rate expressed in terms of the interest payment made each period is calledthe _________ rate.a. stated interestb. compound interestc. effective annuald. periodic intereste. daily interestEFFECTIVE ANNUALRATEc 7. The interest rate expressed as if it were compounded once per year is called the rate.a. stated interestb. compound interestc. effective annuald. periodic intereste. daily interestANNUAL PERCENTAGE RATEb 8. The interest rate charged per period multiplied by the number of periods per year is calledthe _________ rate.a. effective annualb. annual percentagec. periodic interestd. compound intereste. daily interestPURE DISCOUNT LOANd 9. A loan where the borrower receives money today and repays a single lump sum at sometime in the future is called a(n) _________ loan.a. amortizedb. continuousc. balloond. pure discounte. interest-onlyINTEREST-ONLY LOANe 10. A loan where the borrower pays interest each period and repays the entire principal ofthe loan at some point in the future is called a(n) _____ loan.a. amortizedb. continuousc. balloond. pure discounte. interest-onlyAMORTIZED LOANa 11. A loan where the borrower pays interest each period, and repays some or all of theprincipal of the loan over time is called a(n) ____ loan.a. amortizedb. continuousc. balloond. pure discounte. interest-onlyBALLOON LOANc 12. A loan where the borrower pays interest each period, repays part of the principal of theloan over time, and repays the remainder of the principal at the end of the loan, iscalled a(n) ______ loan.a. amortizedb. continuousc. balloond. pure discounte. interest-onlyII. CONCEPTSORDINARY ANNUITY VERSUS ANNUITY DUEc 13. You are comparing two annuities which offer monthly payments for ten years. Both annuities are identical with theexception of the payment dates. Annuity A pays on the first of each month while annuity B pays on the last day of each month. Which one ofthe following statements is correct concerning these two annuities?a. Both annuities are of equal value today.b. Annuity B is an annuity due.c. Annuity A has a higher future value than annuity B.d. Annuity B has a higher present value than annuity A.e. Both annuities have the same future value as of ten years from today.UNEVENCASH FLOWS ANDPRESENT VALUEb 14. You are comparing two investment options. The cost to invest in either option is thesame today. Both options will provide you with $20,000 of income. Option A pays fiveannual payments starting with $8,000 the first year followed by four annual payments of $3,000 each. Option B pays five annual payments of $4,000 each. Which one of thefollowing statements is correct given these two investment options?a. Both options are of equal value given that they both provide $20,000 of income.b. Option A is the better choice of the two given any positive rate of return.c. Option B has a higher present value than option A given a positive rate of return.d. Option B has a lower future value at year 5 than option A given a zero rate of return.e. Option A is preferable because it is an annuity due.UNEVENCASH FLOWS ANDFUTURE VALUEa 15. You are considering two projects with the following cash flows:Project A Project BYear 1 $2,500 $4,000Year 2 3,000 3,500Year 3 3,500 3,000Year 4 4,000 2,500Which of the follow ing stateme nts are true concerning these two projects?I. Both projects have the same future value at the end of year 4, give n a positive rateof return.II. Both projects have the same future value give n a zero rate of retur n.III. Both projects have the same future value at any point in time, given a positive rate of return.IV. Project A has a higher future value tha n project B, give n a positive rate of return.a. II on lyb. IV onlyc. I and III onlyd. II a nd IV onlye. I, II, and III o nlyPERPETUITY VERSUS ANNUITYd 16. A perpetuity differs from an annuity because:a. perpetuity payme nts vary with the rate of in flati on.b. perpetuity payme nts vary with the market rate of in terest.c. perpetuity payme nts are variable while ann uity payme nts are con sta nt.d. perpetuity payme nts n ever cease.e. ann uity payme nts n ever cease.ANNUAL PERCENTAGE RATEe 17. Which one of the following statements concerning the annual percentage rate is correct?a. The annual perce ntage rate con siders in terest on in terest.b. The rate of in terest you actually pay on a loa n is called the annual perce ntage rate.c. The effective annual rate is lower tha n the annual perce ntage rate whe n an in terest rateis compo un ded quarterly.d. When firms advertise the annual percentage rate they are violating U.S. truth-inlending laws.e. The annual perce ntage rate equals the effective annual rate whe n the rate on an account is desig nated as simple in terest.INTEREST RATESb 18. Which one of the following statements concerning interest rates is correct?a. The stated rate is the same as the effective annual rate.b. An effective annual rate is the rate that applies if interest were charged annually.c. The annual percentage rate increases as the number of compounding periods per yearincreases.d. Banks prefer more frequent compounding on their savingsaccounts.e. For any positive rate of interest, the effective annual rate will always exceed the annualpercentage rate.EFFECTIVE ANNUAL RATEc 19. Which of the following statements concerning the effective annual rate are correct?I. When making financial decisions, you should compare effective annual rates rather thanannual percentage rates.II. The more frequently interest is compounded, the higher the effective annual rate.III. A quoted rate of 6 percent compounded continuously has a higher effective annual rate than if the rate were compounded daily.IV. When choosing which loan to accept, you should select the offer with the highest effective annual rate.a. I and II onlyb. I and IV onlyc. I, II, and III onlyd. II, III, and IV onlye. I, II, III,and IVCONTINUOUS COMPOUNDINGd 20. The highest effective annual rate that can be derived from an annual percentage rate of9 percent is computed as:a. .09e -1. .09b. e q.c. e (1 + .09).d. e.09-1.e. (1 + .09)q.PURE DISCOUNT LOAN a 21. A pure discount loan is a(n):a. example of a present value problem.b. loan that is interest-free.c. loan that gives you a discount if you pay your payments on time.d. loan that requires all interest to be paid at the time the loan is made.e. loan that discounts the payments if you pay them in advance.INTEREST-ONLY LOANc 22. The principle amount of an interest-only loan is:a. never repaid.b. repaid in equal increments and included in each loan payment.c. repaid in full at the end of the loan period.d. repaid in equal annual payments even when the loan interest is repaid monthly.e. repaid in increasing increments and included in each loan payment.AMORTIZED LOAN。
