Strayer FIN534 Week 3 Homework Assignment Chapter 4

FIN 534 Week 3 Homework
Assignment Chapter 4
1. Which of
the following statements is CORRECT?
a. Some of the cash
flows shown on a time line can be in the form of annuity payments, but none can
be uneven amounts.
b. A time line is not
meaningful unless all cash flows occur annually.
c. Time lines are
useful for visualizing complex problems prior to doing actual calculations.
d. Time lines cannot
be constructed in situations where some of the cash flows occur annually but
others occur quarterly.
e. Time lines cannot
be constructed for annuities where the payments occur at the beginning of the
periods.
2. Which of the
following statements is CORRECT?
a. Some of the cash
flows shown on a time line can be in the form of annuity payments, but none can
be uneven amounts.
b. A time line is not
meaningful unless all cash flows occur annually.
c. Time lines
are not useful for visualizing complex problems prior to doing actual
calculations.
d. Time lines cannot
be constructed in situations where some of the cash flows occur annually but
others occur quarterly.
e. Time lines can be
constructed for annuities where the payments occur at either the beginning or
the end of the periods.
3. Which of the
following statements is CORRECT?
a. Time lines cannot
be constructed where some of the payments constitute an annuity but others are
unequal and thus are not part of the annuity.
b. A time line is not
meaningful unless all cash flows occur annually.
c. Time lines are not
useful for visualizing complex problems prior to doing actual calculations.
d. Time lines can be
constructed to deal with situations where some of the cash flows occur annually
but others occur quarterly.
e. Time lines can only
be constructed for annuities where the payments occur at the end of the
periods, i.e., for ordinary annuities.
4. Which of the
following statements is CORRECT?
a. A time line is not
meaningful unless all cash flows occur annually.
b. Time lines
are not useful for visualizing complex problems prior to doing actual
calculations.
c. Time lines cannot
be constructed to deal with situations where some of the cash flows occur
annually but others occur quarterly.
d. Time lines can only
be constructed for annuities where the payments occur at the end of the
periods, i.e., for ordinary annuities.
e. Time lines
can be constructed where some of the payments constitute an annuity but others
are unequal and thus are not part of the annuity.
5. You plan to analyze
the value of a potential investment by calculating the sum of the present
values of its expected cash flows. Which of the following would lower the
calculated value of the investment?
a. The discount rate
decreases.
b. The cash flows are
in the form of a deferred annuity, and they total to $100,000. You learn that
the annuity lasts for only 5 rather than 10 years, hence that each payment is
for $20,000 rather than for $10,000.
c. The discount rate
increases.
d. The riskiness of
the investment’s cash flows decreases.
e. The total amount of
cash flows remains the same, but more of the cash flows are received in the
earlier years and less are received in the later years.