Chapter 4 POWERPOINT

Question 1

Time Value of Money

Answer 1

“the sooner a dollar is received, the more quickly it can be ‘put to work’ or invested to increase its value”

Question 2

Cash Flow Patterns

Answer 2

-lump sum amount
-annuity
uneven cash flows

Question 3

Lump-sum amount

Answer 3

single or one-time payment (received or made) that occurs either today or at some date in the future

Question 4

Annuity

Answer 4

multiple payments of the same amount over equal time periods

Question 5

Types of Annuities

Answer 5

ordinary annuity: when the payment is made at the end of the period (example: january 31)

annuity due: when the payment is made at the beginning of the period (example: january 1)