4 Topic 4 Quiz

Due Oct 3 at 11:59pm Points 10 Questions 10 Time Limit None

Attempt History
Attempt Time Score
LATEST Attempt 1 14 minutes 10 out of 10

Score for this quiz: 10 out of 10

Submitted Oct 3 at 5:38pm
This attempt took 14 minutes.

Question 1 1 / 1 pts

An annuity stream of cash flow payments is a set of level cash flows occurring each time period forever.

True

Correct!
False

Question 2 1 / 1 pts

Annuities where the payments occur at the end of each time period are called ordinary annuities, whereas annuities due refer to annuity streams
with payments occurring at the beginning of each time period.

Correct!
True

False

Question 3 1 / 1 pts

The interest rate charged per period multiplied by the number of periods per year is called the effective annual rate (EAR).

True

Correct!
False

Question 4 1 / 1 pts

A loan where the borrower pays interest each period and repays some or the entire principal of the loan over time is called an amortized loan.

Correct!
True

False

Question 5 1 / 1 pts

A perpetuity is a cash flow stream with an infinite series of equal payments.

Correct!
True

False

Question 6 1 / 1 pts
 The EAR should be used to compare two alternative investments with different compounding periods.

Correct! True

False

Question 7 1 / 1 pts

The APR (and PR when the compounding periods is other than annual) is not the rate that should be used in time value of money calculations.

True

Correct! False

Question 8 1 / 1 pts

The Frank Trust would like to gift some money to their local university so that the money gifted will provide $100,000 to the university each year
from now on. The funds are expected to earn an 10% rate of return. How much money does the Frank Trust have to gift to the university today?

$2,500,000

$1,500,000

$1,250,000

Correct! $1,000,000

Question 9 1 / 1 pts

You borrow $7,900 to buy a car. The terms of the loan call for monthly payments for five years at a 7.5% rate of interest. What is the amount of
each payment?

$153.74

$158.39

$154.57

Correct! $158.30

Question 10 1 / 1 pts

What is the future value in 10 years of $2,000 payments received at the beginning of each year for the next 10 years? Assume an interest rate of
5.625%.

$12,950.96

Correct! $27,358.90

$25,901.92

$13,679.45

Quiz Score: 10 out of 10