# Multiplying the by the number of compounding periods

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multiplying the __________ by the number of compounding periods per year. a) Principle sum b) Interest rate per compounding period c) Effective interest rate d) None of the above
Mathematical equivalence is a consequence of the mathematical relationship between _______. D
What is the annual effective
interest rate equivalent for a nominal rate of 6.000%, compounded semi-annually? (three decimal places accuracy) The timing of cash flows is always
simple and regular. (T/F) An assumption required by the True
principle of discrete compounding
is that the compounding periods are of equal length. (T/F)
Models of cash flows which assume that all cash flows and all compounding of cash flows occur at the ends of conventionally defined periods are called __________. B
To find the annuity value, A, equivalent to a present amount, P, with a given interest rate, i, and the number of periods over which this annuity will be paid, N, one would use the __________ factor. A
17 years ago you put \$38,000 in an investment account earning 14%. In \$314,469.55
year 6 you took out a sum of \$9,000 from the account. How much money do you have now? An investment may be thought of
as an exchange of resources now for an expected flow of benefits in the future. (T/F) The payback period is the number True
of years it takes for an investment to be recouped when the interest rate is assumed to be zero. (T/F) The cost of capital for large companies is an average of the costs of borrowing and of selling shares, which is referred to as the ___ average cost of capital.
The ______ can also be used for the
annual worth method if the assumption of being able to indefinitely repeat the choice of alternatives is not justified.
Chloe invests \$65,000 today. At the
end of year 4 she will start to withdraw a consistent amount annually until the end of year 24. If the interest rate is 14%, how much money can be withdrawn each year? Adam withdraws uniformly from a
savings account, at a rate of \$7,000 for 10 years. Then due to unforeseen circumstances he needs to increase his annual withdrawal by an additional \$1300. He continues to withdraw money at this increased rate for another 5 years until the account is exhausted. With an interest rate of 8%, what was the initial value of the savings account?
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