Question
Which of the following statements is TRUE? A) The discounting process removes the interest part from the future value. B) If you lend $1,000 today
Which of the following statements is TRUE?
A) The discounting process removes the interest part from the future value.
B) If you lend $1,000 today and are repaid $1,123.60 in two years, then the time line from your perspective would include a negative cash flow of $1,000 at the one-year mark.
C) The formula for the present value of an annuity would give us the value at the end of year 5 for an annuity with a first payment that occurs at the end of year 4.
D) Because the formula for the present value of a perpetuity is PMT / r, the formula for the future value of a perpetuity is PMT * r.
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