4-123. Indicate whether each of the following statements is true (T) or false (F). (all sections)

a. T F Interest is money paid for the use of equity capital.

b. T F (A/F, i%, N) = (A/P, i%, N) + i.

c. T F Simple interest ignores the time value of money principle.

d. T F Cash-flow diagrams are analogous to free-body diagrams for mechanics problems.

e. T F $1,791 10 years from now is equivalent to $900 now if the interest rate equals 8% per year.

f. T F It is always true that i > r when M ≥ 2. g. T F Suppose that a lump sum of $1,000 is invested at r = 10% for eight years. The future equivalent is greater for daily compounding than it is for continuous compounding. h. T F For a fixed amount, F dollars, that is received at EOY N, the “A equivalent” increases as the interest rate increases. i. T F For a specified value of F at EOY N, P at time zero will be larger for r = 10% per year than it will be for r = 10% per year, compounded monthly.