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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
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, Po, N) = (A/ P, Po, 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
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