A) The cash flows are in the form of a deferred annuity, and they total to $100,000. You learn that the annuity lasts for only 5 rather than 10 years, hence that each payment is for $20,000 rather than for $10,000.
B) The discount rate increases.
C) The riskiness of the investment's cash flows decreases.
D) The total amount of cash flows remains the same, but more of the cash flows are received in the earlier years and less are received in the later years.
E) The discount rate decreases.
G) D) and E)
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B
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B) False
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B) False
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A) $225,367
B) $237,229
C) $249,090
D) $261,545
E) $274,622
G) A) and D)
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A) $17,419.55
B) $17,593.75
C) $17,769.68
D) $17,947.38
E) $18,126.85
G) A) and E)
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A) $585.43
B) $614.70
C) $645.44
D) $677.71
E) $711.59
G) B) and D)
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A) A time line is not meaningful unless all cash flows occur annually.
B) Time lines are not useful for visualizing complex problems prior to doing actual calculations.
C) Time lines cannot be constructed to deal with situations where some of the cash flows occur annually but others occur quarterly.
D) Time lines can only be constructed for annuities where the payments occur at the end of the periods, i.e., for ordinary annuities.
E) Time lines can be constructed where some of the payments constitute an annuity but others are unequal and thus are not part of the annuity.
G) A) and D)
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A) $2,819.52
B) $2,967.92
C) $3,116.31
D) $3,272.13
E) $3,435.74
G) B) and E)
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A) $205.83
B) $216.67
C) $228.07
D) $240.08
E) $252.08
G) A) and E)
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A) $1,412.84
B) $1,487.20
C) $1,565.48
D) $1,643.75
E) $1,725.94
G) None of the above
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A) $12.54
B) $13.20
C) $13.86
D) $14.55
E) $15.28
G) B) and D)
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A) $11,262.88
B) $11,826.02
C) $12,417.32
D) $13,038.19
E) $13,690.10
G) A) and B)
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A
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A) $16,576
B) $17,449
C) $18,367
D) $19,334
E) $20,352
G) A) and C)
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A) $3,726
B) $3,912
C) $4,107
D) $4,313
E) $4,528
G) A) and C)
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A) 15.27%
B) 16.08%
C) 16.88%
D) 17.72%
E) 18.61%
G) None of the above
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A) 8.46%
B) 8.90%
C) 9.37%
D) 9.86%
E) 10.38%
G) A) and D)
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A) $411.57
B) $433.23
C) $456.03
D) $480.03
E) $505.30
G) D) and E)
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A) 15.54%
B) 16.36%
C) 17.18%
D) 18.04%
E) 18.94%
G) B) and E)
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A) $7,917
B) $8,333
C) $8,772
D) $9,233
E) $9,695
G) A) and B)
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D
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A) The remaining balance after three years will be $125,000 less one third of the interest paid during the first three years.
B) Because it is a fixed-rate mortgage, the monthly loan payments (which include both interest and principal payments) are constant.
C) Interest payments on the mortgage will increase steadily over time, but the total amount of each payment will remain constant.
D) The proportion of the monthly payment that goes towards repayment of principal will be lower 10 years from now than it will be the first year.
E) The outstanding balance declines at a slower rate in the later years of the loan's life.
G) A) and C)
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