True and False Questions

Agree with each of the statements or reject it and modify it so that it is acceptable.

1. If the interest rate increases, the compound sum of an annuity and the present value of an annuity both increase.
2. If one bank pays 8 percent compounded annually on its savings deposits and a second bank pays 8 percent compounded semiannually, the second bank is paying approximately twice as much as interest.
3. The present value of an annuity interest factor (PVIFA_i,n) is equal to the present value of an annuity interest factor (FVIFA_i,n) times the present value interest factor (PVIF_i,n).
4. A four-year ordinary annuity has equal payments occurring at times 1, 2, 3, and 4 (time 1 = one year from today, etc.) and a four-year annuity due has equal payments occurring at times 0, 1, 2, and 3.