Question

In: Finance

Which of the following is not one of the intuitive reasons that a cash flow in...

Which of the following is not one of the intuitive reasons that a cash flow in the future is worth less than a similar cash flow today?

	a.	When there is money inflation, the value of currency decreases over time.
	b.	A promised cash flow in the future may not be received (there is risk).
	c.	People prefer current consumption to future consumption.
	d.	Future income may not be the same as income today.

Which of the following is true about the present value of a regular annuity when compared to the present value of an annuity due with the same payments and interest rate?

	a.	The present value of the annuity due will always be less than the present value of the regular annuity because the regular annuity has one less period of discounting.
	b.	The present value of the annuity due will always be greater than the present value of the regular annuity because the regular annuity has one less period of discounting.
	c.	The present value of the annuity due will always be greater than the present value of a regular annuity because the annuity due has one less period of discounting.
	d.	The present value of the annuity due will always be less than the present value of a regular annuity because the annuity due has one less period of discounting.

As the frequency of discounting increases...

	a.	the present value of an annuity gets larger.
	b.	the present value of a single sum in the future gets smaller.
	c.	the present value of a single sum in the future get larger.
	d.	the future value of a single sum today gets smaller.

When calculating a present value using a higher interest rate in the equation will cause the present value to...

	a.	increase.
	b.	possibly increase or decrease.
	c.	decrease.
	d.	not change

What is the PV of $10,000 expected to be received 5 years from now assuming an 8% annual interest rate?

	a.	$6,867.49
	b.	$6,768.39
	c.	$6,805.83
	d.	$5,402.69

Expert Solution

Which of the following is not one of the intuitive reasons that a cash flow in the future is worth less than a similar cash flow today?

a.	When there is money inflation, the value of currency decreases over time.

Which of the following is true about the present value of a regular annuity when compared to the present value of an annuity due with the same payments and interest rate?

c.	The present value of the annuity due will always be greater than the present value of a regular annuity because the annuity due has one less period of discounting.

Explanation:- Less period of discounting will result in higher present value

As the frequency of discounting increases...

b.	the present value of a single sum in the future gets smaller.

Explanation : due to compounding effect

When calculating a present value using a higher interest rate in the equation will cause the present value to...

c.

decrease.

Explanation: PV = FV / Interest rate factor

What is the PV of $10,000 expected to be received 5 years from now assuming an 8% annual interest rate?

c.

$6,805.83

Explanation: - PV = 10000/(1+8%)^5

jeff jeffy answered 9 months ago

Which of the following is not a cash flow from financing activities? Select one: A. Cash...

Which of the following is not a cash flow from financing activities? Select one: A. Cash received from issuance of preferred stock B. Cash paid to settle accounts payable C. Cash paid as dividends on common stock D. Cash received from issuance of bonds payable E. None of the above

Which one of the following affects net income but not the operating cash flow?

Which one of the following affects net income but not the operating cash flow? 1) taxes 2) interest expense 3) dividends 4) cost of goods sold

Which one of the following transactions does NOT involve a cash flow? A prepayment of insurance...

Which one of the following transactions does NOT involve a cash flow? A prepayment of insurance B issue of shares C issue of bonus shares D revenue received in advance

Which one of the following is FALSE for the Cash Flow Statement? [1 pt] (a) Beginning...

Which one of the following is FALSE for the Cash Flow Statement? [1 pt] (a) Beginning cash + cash inflow – cash outflow = ending cash (b) Collecting a receivable (for a previously completed transaction) increases cash inflow (c) Delaying the collection of its receivables hurt the overall cash flow of a firm (d) Making advance payments for purchases made by a firm improves it cash flow (e) Net profit and ending cash do not necessarily have to be the...

Which of the following statements is true concerning the free cash flow hypothesis? Select one: A....

Which of the following statements is true concerning the free cash flow hypothesis? Select one: A. Companies with high operating earnings must have high free cash flows. B. Companies with low capital expenditures must have high free cash flows. C. Companies that are efficiently managed must have high free cash flows. D. All of the above are true. E. None of the above are true.

What is cash flow planning? Why is cash flow planning important? List five reasons for saving...

What is cash flow planning? Why is cash flow planning important? List five reasons for saving Why do some people have a difficult time saving ? Provide five methods for helping save? Why do people construct a budget ?

Which one of the following will decrease the cash flow from assets, all else equal? Select...

Which one of the following will decrease the cash flow from assets, all else equal? Select one: a. decrease in the change in net working capital b. increase in cash flow to stockholders c. increase in cash flow to creditors d. increase in net capital spending e. increase in operating cash flow

Which of the following cash flows are not considered in the calculation of the terminal cash-flow...

Which of the following cash flows are not considered in the calculation of the terminal cash-flow for a capital investment proposal? Tax effect on Capital Loss/Gain Book value of the asset cost of issuing new bonds to finance the new project. net working capital. Salvage price of the asset And please explain as well

Which of the following cash flows is NOT an incremental cash flow associated with a project...

Which of the following cash flows is NOT an incremental cash flow associated with a project to dig a new gold mine? Select one: a. The cost of taking on new employees who will be hired to work on the mine site. b. The cost of land which will be purchased for the new mine. c. The cost of mining equipment which will be purchased for the new mine. d. The cost of an environmental impact study which has been...

which of the following is not a goal of investment to have a steady cash flow...

which of the following is not a goal of investment to have a steady cash flow during lifetime to allocate resources along with the consumption pattern to maximize future spending to minimize current spending