Multiple Choice: Present and Future Values Select the best answer for each of the following:

1, The present value of a future cash payment:

a. Increases as the effective interest rate goes up. /

b. Decreases as the effective interest rate goes up.

c. Is determined by using the nominal rate of interest.

d. Is determined by using the stated rate of interest.

2. The future value of a cash payment:

a. Represents the amount that must be deposited today to receive a desired amount at some later date.

b. Generally is less than the amount that must be deposited today to receive a desired amount at some later date.

c. Represents the amount that will be received today if the recipient agrees to pay a given amount at some later date.

d. Represents the amount that will be available at some later date if a given amount is deposited today.

3. An annuity represents:

a. A series of equal payments made at uniform intervals over a number of periods.

b. A series of equal payments paid at differing intervals over a number of periods.

c. Any series of payments over a number of periods.

d. Any series of payments made at uniform intervals over a number of periods.

4. An investment of cash in a project is appropriate if:

a. The present value of the expected cash receipts is greater than the required investment.

b. The total of the expected cash receipts is greater than the required investment.

c. The future value of the expected cash receipts is greater than the required investment.

d. The present value of the expected cash receipts is greater than the future value of the expected cash receipts.