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- Introduction to Financial ManagementReviewing Financial StatementsAnalyzing Financial StatementsTime Value of Money 1: Analyzing Single Cash FlowsTime Value of Money 2: Analyzing Annuity Cash FlowsUnderstanding Financial Markets and InstitutionsValuing BondsValuing StocksCharacterizing Risk and ReturnEstimating Risk and ReturnCalculating the Cost of CapitalEstimating Cash Flows on Capital Budgeting ProjectsWeighing Net Present Value and Other Capital Budgeting CriteriaWorking Capital Management and PoliciesFinancial Planning and ForecastingAssessing Long-Term Debt, Equity, and Capital StructureSharing Firm Wealth: Dividends, Share Repurchases, and Other PayoutsIssuing Capital and the Investment Banking ProcessInternational Corporate FinanceMergers and Acquisitions and Financial Distress

Question 1

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Cash inflows are designated with a positive number.

Cash outflows are designated with a positive number.

The cost is known as the interest rate.

The time line shows the magnitude of cash flows at different points in time.

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Question 2

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their purchases to give them the satisfaction in the future that compensates them for the interest payments charged on the loan.

the time value of money to apply only if they are saving money.

interest rates to rise.

that consumers don't need to calculate the impact of interest on their purchases.

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Question 3

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The lower the interest rate, the larger the future value will be.

The higher the interest rate, the larger the future value will be.

Future values are not affected by changes in interest rates.

One would need to know the present value in order to determine the impact.

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Question 4

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The lower the interest rate, the larger the present value will be.

The higher the interest rate, the larger the present value will be.

Present values are not affected by changes in interest rates.

One would need to know the future value in order to determine the impact.

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Question 5

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discounting.

multiplying.

compounding.

computing.

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Question 6

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discounting.

multiplying.

compounding.

computing.

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Question 7

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discount rate.

multiplier.

compound rate.

dividend.

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Question 8

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the present value required to double an investment.

the future value required to double an investment.

the payments required to double an investment.

the number of years required to double an investment.

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Question 9

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smaller than present values.

larger than present values.

equal to present values.

are completely independent of present values.

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Question 10

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worth more than a dollar paid (or received) today.

worth as much as a dollar paid (or received) today.

not worth as much as a dollar paid (or received) today.

not comparable to a dollar paid (or received) today.

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Question 11

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the annual rate earned.

the annual payments required.

whether the present value or the future value is a cash inflow.

whether the present value or the future value is a cash outflow.

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Question 12

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the lower the interest rate, the shorter the time period needed to achieve the growth.

the higher the interest rate, the shorter the time period needed to achieve the growth.

the interest rate has nothing to do with the length of the time period needed to achieve the growth.

the Rule of 72 is the only way to calculate the time period needed to achieve the growth.

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Question 13

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only present value equations.

only future value equations.

both present value and future value equations.

the Rule of 72.

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Question 14

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the greater the interest earned on the original deposit exceeds the interest-on-interest.

the greater the compounding effect.

the greater the present value must be to reach a financial goal.

the greater the risk to the investor of not reaching a financial goal.

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Question 15

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$28

$700

$728

$1,428

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Question 16

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$1,000

$1,005

$1,050

$2,050

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Question 17

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$120

$2.000

$2,120

$4,120

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Question 18

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$135.00

$140.71

$735.00

$814.20

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Question 19

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$35.00

$98.36

$535.00

$690.82

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Question 20

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6 percent in the second year, and

8 percent in the third year.

What would be the third year future value?

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$527.14

$595.00

$601.02

$1595.00

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