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Homework answers / question archive / 1) Which of the following statements is FALSE? A) The process of moving a value or cash flow forward in time is known as compounding

1) Which of the following statements is FALSE? A) The process of moving a value or cash flow forward in time is known as compounding

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1) Which of the following statements is FALSE?

A) The process of moving a value or cash flow forward in time is known as compounding.

B) The effect of earning interest on interest is known as compound interest.

C) It is only possible to compare or combine values at the same point in time.

D) A dollar in the future is worth more than a dollar today.

 

2)Which of the following statements is FALSE?

A) Finding the present value and compounding are the same.

B) A dollar today and a dollar in one year are not equivalent.

C) If you want to compare or combine cash flows that occur at different points in time, you first need to convert the cash flows into the same units or move them to the same point in time.

D) The equivalent value of two cash flows at two different points in time is sometimes referred to as the time value of money.

 

3)At an annual interest rate of 7%, the future value of $5,000 in five years is closest to:

A) $3,565

B) $6,750

C) $7,015

D) $7,035

 

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