Which one of the following statements correctly defines a time value of money relationship? Multiple Choice…
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Question “Which one of the following statements correctly defines a time value of money relationship? Multiple Choice…”
Which one of the following statements correctly defines a time value of money relationship? Multiple Choice 2.5 points eBook • Time and future values are inversely related, all else held constant. Print References O Interest rates and time are positively related, all else held constant. O An increase in a positive discount rate increases the present value. O An increase in time increases the future value given a zero rate of interest. O Time and present value are inversely related, all else held constant.
Check Project X has cash flows of $8,500, $8,000, $7,500, and $7,000 for Years 1 to 4, respectively. Project Y has cash flows of $7,000, $7,500, $8,000, and $8,500 for Years 1 to 4, respectively. Which one of the following statements is true concerning these two projects given a positive discount rate? (No calculations needed) 2.5 points eBook Multiple Choice Print References Both projects have the same future value at the end of Year 4. o Both projects have the same value at Time 0. o Both projects are ordinary annuities. o o Project Y has a higher present value than Project X.
Multiple Choice Ο Both projects have the same future value at the end of Year 4. 2.5 points eBook Ο Both projects have the same value at Time 0. Print References Ο Both projects are ordinary annuities. O Project Y has a higher present value than Project X. Ο Project X has both a higher present and a higher future value than Project Y.
Project A has cash flows of $4,000, $3,000, $0, and $3,000 for Years 1 to 4, respectively. Project B has cash flows of $2,000, $3,000, $2,000, and $3,000 for Years 1 to 4, respectively. Which one of the following statements is correct assuming the discount rate is positive? (No calculations needed) oints Multiple Choice eBook Print O The cash flows for Project B are an annuity, but those of Project A are not. The cash flows for References O Both sets of cash flows have equal present values as of Time 0. O The present value at Time 0 of the final cash flow for Project A will be discounted using an exponent of three. O Both projects have equal values at any point in time since they both pay the same total amount.
Multiple Choice The cash flows for Project B are an annuity, but those of Project A are not. 2.5 points eBook Both sets of cash flows have equal present values as of Time 0. Print References C) The present value at Time 0 of the final cash flow for Project A will be discounted using an exponent of three. Both projects have equal values at any point in time since they both pay the same total amount. Project B is worth less today than Project A.
Answer
Time to solve Value of money Oilallonthp anguo ame and present values are in versely solved all else being constant. If the time period is longer, the amount that will be set aside today will decrease (Vice Versci 2. Project x has both higher prescuts and a higher Jurure value. Let’s say that the discount rate is 5% – Project y Project prfactor Date Prof. Cashflow, Can How gate @s() Prof. Condrrows @st). 0.95 SOAS 7000 7500 0.95 0.91 11.850o 7280 6880 6880 C990 27325 086 2. 8000 3.7500 40 7700 6450 5740 8 SOO 0.82 27.56
3 Project B was worth today tham Project a Taking same sale @ sli Progo y low Cr Pfador pugcof2000 oas 1900 Booo09 2230 1. 4ooo 0.95 0.4 3800 2230 2. 3000 0.86 2000 3000 0.82 2460 – 4.3000 0.82 8810 8990 Project B pre profeet In Comparison Apr
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