Chapter 5 Flashcards
1
Q
An annuity in which the payments are made at the beginning of each period is a(n)
A
annuity due.
2
Q
The present value of a future cash-flow:
A
increases as the discount rate decreases.
3
Q
Money has time value because:
A
The time value of money is based on the idea that people prefer to consume goods today rather than sometime in the future, and they will require compensation for deferring consumption. This is because a dollar in hand today can be used for consumption or can be invested to earn interest.
