Valor del dinero

Chapter 4
Time Value of Money
Learning Goals
1. 2. 3. 4. 5. 6. Discuss the role of time value in finance, the use of computational aids, and the basic patterns of cash flow. Understand the concept of future value and present value, their calculation for single amounts, and the relationship between them. Find the future value and the present value of both an ordinary annuity and an annuity due,and the present value of a perpetuity. Calculate both the future value and the present value of a mixed stream of cash flows. Understand the effect that compounding interest more frequently than annually has on future value and the effective annual rate of interest. Describe the procedures involved in (1) determining deposits needed to accumulate to a future sum, (2) loan amortization, (3)finding interest or growth rates, and (4) finding an unknown number of periods.

True/False Questions
1. Since individuals are always confronted with opportunities to earn positive rates of return on their funds, the timing of cash flows does not have any significant economic consequences. Answer: FALSE Level of Difficulty: 1 Learning Goal: 1 Topic: Role of Time Value in Finance Time-value of moneyis based on the belief that a dollar that will be received at some future date is worth more than a dollar today. Answer: FALSE Level of Difficulty: 1 Learning Goal: 1 Topic: Role of Time Value in Finance Future value is the value of a future amount at the present time, found by applying compound interest over a specified period of time. Answer: FALSE Level of Difficulty: 1 Learning Goal: 1 Topic:Future Value

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Interest earned on a given deposit that has become part of the principal at the end of a specified period is called compound interest. Answer: TRUE Level of Difficulty: 1 Learning Goal: 1 Topic: Compound Interest The future value interest factor is the future value of $1 per period compounded at i percent for n periods.Answer: FALSE Level of Difficulty: 1 Learning Goal: 2 Topic: Future Value For a given interest rate, the future value of $100 increases with the passage of time. Thus, the longer the period of time, the greater the future value. Answer: TRUE Level of Difficulty: 1 Learning Goal: 2 Topic: Future Value The greater the potential return on an investment and the longer the period of time, the higher thepresent value. Answer: FALSE Level of Difficulty: 1 Learning Goal: 2 Topic: Present Value Everything else being equal, the higher the interest rate, the higher the future value. Answer: TRUE Level of Difficulty: 2 Learning Goal: 2 Topic: Future Value The future value increases with increases in the interest rate or the period of time funds are left on deposit. Answer: TRUE Level of Difficulty: 2Learning Goal: 2 Topic: Future Value Everything else being equal, the higher the discount rate, the higher the present value. Answer: FALSE Level of Difficulty: 2 Learning Goal: 2 Topic: Present Value Everything else being equal, the longer the period of time, the lower the present value. Answer: TRUE Level of Difficulty: 2 Learning Goal: 2 Topic: Present Value

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The present value interest factor for i percent and n periods is the inverse of the future value interest factor for k percent and n periods. Answer: TRUE Level of Difficulty: 2 Learning Goal: 2 Topic: Present Value Given a discount rate of zero percent and n periods of time, the present-value interest factor andfuture-value interest factor are equal. Answer: TRUE Level of Difficulty: 2 Learning Goal: 2 Topic: Present Value Annuity due is an amount that occurs at the beginning of each period. Answer: TRUE Level of Difficulty: 1 Learning Goal: 3 Topic: Annuities Future Value Interest Factor Annuity (FVIFA) is the future value of $1 ordinary annuity for n period compounded at k percent. Answer: TRUE Level of...