which of the following statements is incorrect (least correct)? A. if the discount (or interest) rate...

which of the following statements is incorrect (least correct)?

A. if the discount (or interest) rate is positive, the future value of an expected series of payments will always exceed the presents value if the same series.

B. Disregarding risk, if money has time value, it is impossible for the present value of a given sum to be greater than its future value.

C. Disregarding risks, if the present value of a sum is equal To ITs future value, either the interest rate = 0, or the number of Time periods = 0.

D. If the dicount (or interest) rate is positive, the fiture value of annuity due will always be less than the future value of an equivalent regular annuity, and ghs present value of an annuity due Will Always be less than the present value of an equivalent regular annuity

E. none of the above

Expert Solution

A. if the discount (or interest) rate is positive, the future value of an expected series of payments will always exceed the presents value if the same series. TRUE

B. Disregarding risk, if money has time value, it is impossible for the present value of a given sum to be greater than its future value. TRUE

C. Disregarding risks, if the present value of a sum is equal To ITs future value, either the interest rate = 0, or the number of Time periods = 0. TRUE

D. If the discount (or interest) rate is positive, the future value of annuity due will always be less than the future value of an equivalent regular annuity, and ghs present value of an annuity due Will Always be less than the present value of an equivalent regular annuity. FALSE. Annuity due is when annuity is received at the beginning of the each period and therefore FV of annuity due should be greater than annuity regular and PV of annuity due will be greater than PV of annuity regular.

Therefore option D is correct.

jeff jeffy answered 1 year ago

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