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FIN 301 Chapter 5 Exam Questions with Correct Answers
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Time Line - Answer--an important tool used in time value analysis -a graphical representation used to show the timing of cash flows Future Value (FV) - Answer-The amount to which a cash flow or series of cash flows will grow over a given period of time when compounded at a given interest rate ...

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  • August 23, 2024
  • 2
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • fin 301 chapter 5 exam questions with correct answ
  • time line answer an important tool used in time

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FIN 301 Chapter 5 Exam Questions with
Correct Answers
Time Line - Answer--an important tool used in time value analysis
-a graphical representation used to show the timing of cash flows

Future Value (FV) - Answer-The amount to which a cash flow or series of cash flows will
grow over a given period of time when compounded at a given interest rate

Present Value - Answer-The value today of a future cash flow or series of cash flows

Compounding - Answer-The arithmetic process of determining the final value of a cash
flow or series of cash flows when compound interest is applied

Compound Interest - Answer-Occurs when interest is earned on prior periods' interest

Simple Interest - Answer-Occurs when interest is not earned on interest

Opportunity Cost - Answer-The rate of return you could earn on an alternative
investment of similar risk

Discounting - Answer--The process of finding the present value of a cash flow or a
series of cash flows
-the reverse of compounding

Annuity - Answer-A series of equal payments at fixed intervals for a specified number of
periods

Ordinary (Deferred) Annuity - Answer-An annuity whose payments occur at the end of
each period

Annuity Due - Answer-An annuity whose payments occur at the beginning of each
period

FVAn - Answer-The future value of an annuity over n periods

PVAn - Answer-The present value of an annuity over n periods

Perpetuity - Answer-A stream of equal payments at fixed intervals expected to continue
forever

Uneven (Nonconstant) Cash Flows - Answer-A series of cash flows where the amount
varies from one period to the next

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