1. Starting to invest carly for retirement increases the benefits of compound interest. 2. A time line is meaningful even if all cash flows do not occur annually. 3. Some of the cash flows shown on a time line can be in the form of annuity payments while others can be uneven amounts. 4. Ifa bank compounds savings accounts quarterly, the nominal rate will exceed the effective annual rate. 5. Suppose Sally Smith plans to invest $1,000. She can earn an effective annual rate of 5% on Security A. while Security B has an effective annual rate of i 2%. After 11 years, the compounded value of Security B should be more than twice the compounded value of Security A. (lgnore risk, and assume that compounding occurs annually) The payment made each period on an amortized loan is constant, and it consists of some interest and some principal. The closer we are to the end of the loan's life, the greater the percentage of the payment that will be a repayment of principal. 6. Your bank account pays a 6% nominal rate of interest. The interest is compounded quarterly following statements is CORRECT? a. The periodic rate of interest is 1.5% and the effective rate of interest is 3%. b. The periodic rate of interest is 6% and the effective rate of interest is greater than 6%. c. The periodic rate of interest is 1.5% and the effective rate of interest is greater than 6%. d- The periodic rate of interest is 3% and the effective rate of interest is 6%. e. The periodic rate of interest is 6% and the effective rate of interest is also 6%. which of the 7. Sue now has S490. How much would she have after 8 years if she leaves it invested at 8.5% with annual compounding? a. $941.10 b. $724.64 . $837.58 d. $1,148.14 e. $1,157.5s 8, 9. Last year Rocco Corporation's sales were $725 million. If sales grow at 6% per year, how large (in million will they be 5 years later? a. $756.77 b. $1,096.34 . $1,212.77 d. $921.70 e. $970.21