Question 18

1.

All things equal which one of the following statements is true concerning annuities?

Answer

An ordinary annuity is more valuable than an annuity due over any period regardless of interest rates..

A decrease in the number of payments increases the future value of an annuity due over a specific time pjeriod.

An annuity with payments at the beginning of each period without interest rate changes is called an ordinary annuity.

An increase in the discount rate decreases the present value and increases the future value of an annuity.

Question 21

1.

Capital budgeting includes the evaluation of which of the following?

Answer

Size of future cash flows only

Size and timing of future cash flows only

Timing and risk of future cash flows only

Risk and size of future cash flows only

Size timing and risk of future cash flows

Question 22

1.

Cash flow from assets is defined as:

Answer

the cash flow to shareholders minus the cash flow to creditors.

operating cash flow plus the cash flow to creditors plus the cash flow to shareholders.

operating cash flow minus the change in net working capital minus net capital spending.

operating cash flow plus net capital spending plus the change in net working capital.

cash flow to shareholders minus net capital spending plus the change in net working capital.