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Do you agree or disagree with this statement and why? D the key interest rate in an economy. December is typically a time when labour, space, and credit are in high demand so there is a possibility that the resources you need will be unavailable or more expensive than expected, and there will then be no time to recover. Attempting to treat lives on the same basis as dollars is both cold-blooded and ridiculous. B the future worth of an investment. Kamal Lohia.

Applied User1: He decided to use the investment certificate to finance his return to the university that he left because of the financial problems at the time. What interest rate does the bank pay?

E Diff: Quantitative 4. B converting a given interest rate with a compounding period to an equivalent interest rate with a one- year compounding period. C dividing the interest rate per compounding period by the number of compounding periods per year.

D multiplying the simple interest rate by the number of years. E multiplying the interest rate per compounding period by the number of compounding periods per year. Qualitative 8 Your credit card statement says that your card charges 0.

What is the actual interest rate per year? Quantitative 5. Quantitative 11 What does a cash flow diagram of a project represent? A summary of benefits and costs of a project B summary of the timing and magnitude of payments and receipts as they occur over time C magnitude of cash flows at a given period of time D summary of present, future, and annual worths of a project E change in value of money at different interest rates at various compounding periods Answer: Qualitative 12 A project is represented by the following cash flow diagram: What are the project's cash flows?

Quantitative 6. Irving Ltd.

The duration of the construction phase is one year. What cash flow diagram represents this project? E Answer: Quantitative 14 What does the term "market equivalence" imply?

A indifference on the part of a decision maker among available choices B the existence of a mathematical relationship between time and money C the ability to exchange one cash flow for another at minimum cost D the ability to exchange one cash flow for another at no cost E the ability to obtain a zero net cash flow Answer: Quantitative 8.

How much should you deposit in your bank account now if the account pays you 0. What is the effective annual rate?

Quantitative 18 Emily is considering two mutually exclusive financial options: E make zero economic profit. Quantitative 9. What annual interest rate has the project been earning if interest is compounded monthly?

Quantitative 21 Equivalence is a condition that exists when A the value of a cost at one time is numerically equal to the value of the related benefits received at a different time. B the present worth of a cost equals the future worth of a cost at any point in time.

C the present worth of all costs and benefits equals the future worth of these costs and benefits at any point in time. D the project breaks even, meaning costs equal benefits at a certain point in time.

E a decision-maker assesses two sets of cashflows as equally attractive. Qualitative Which of the following statements about this cash flow diagram is correct? A Year 1 ends at point A and year 2 begins at point B. B Year 1 ends at point 2 and year 2 begins at point B. C Year 1 ends at point 2 and year 2 begins at point 2. D A project has four periods. E First cost should be put at point 1. Quantitative 23 An effective interest rate has A an arbitrary compounding period.

B a compounding period that is normally less than a year. C an exogenously given compounding period. D a one-year compounding period. E no compounding periods. How much interest would Jennifer get at the end of four years?

Quantitative He deposited this money in his bank account that pays a 1. After one year he was approached by his friend who said that he could offer Peter an investment deal for a two-year period. What would the market equivalence be of Peter's money?

Quantitative 26 In general, an interest rate is A the difference between the amount of money lent and the amount of money repaid later.

B a percentage change in the time value of money. C the ratio of the amount of money lent to the amount of money repaid later. D the future worth of the money. E the rate of return on direct investment. Qualitative 27 Nominal interest rate is A the actual but not usually stated interest rate. Some of the arguments that might be advanced are as follows: Each life is unique and of inestimable value.

Attempting to treat lives on the same basis as dollars is both cold-blooded and ridiculous.

Medical administrators, for example, do have a responsibility to save lives, and they have limited resources to meet this responsibility. If they are to apportion their resources rationally, they must be prepared to compare the results of different strategies.

To support the point of view that future lives saved should be discounted by some percentage in comparison with present lives, the following arguments might be offered: Suppose we make the comparison fifty years in the future.

If we spend our resources on traffic police, we will have saved the lives of those who would have died in accidents, and, because we spent the money that way, the world of fifty years hence will also contain the descendants of those who would have died.

So the total number of live humans will be increased by more than fifty. This argument assumes that creating a new life is of the same value as preserving an existing life. We do not usually accept that assumption; for example, many governments may promote population control by limiting the number of children born, but it would be unacceptable to control the population by killing off the old and infirm. To give another example, if I am accused of murder, it would not be an acceptable defence to argue that I have fathered two children, and have thus made a greater contribution to society than a law-abiding bachelor.

Just as I charge you interest on a loan because of the uncertainty of what might happen between now and the due date—you could go bankrupt, I could die, etc. For example, a cure for cancer could be discovered ten years from now, and then all the money spent on the anti-smoking campaign will have been wasted, when it could have been used to save lives lost in highway accidents.

We should not be counting numbers of lives, but years of human life. Thus it is better to spend the money on preventing accidents, because these kill. The world population is growing. Thus, for humanity as a whole, losing a fixed number of lives can more easily be born in the future than it can now.

This is an extension of the argument that it is worse to kill a member of an endangered species than of a species that is plentiful. Flag for inappropriate content. Related titles. The Unwinding: An Inner History of the New America.

Jump to Page. Search inside document. Key Concepts Simple Interest: Nominal and Effective Discrete Compound Interest: Applications 2. Then, determine the nominal interest rate associated with the effective interest: More Challenging Problems 2.

Instalment F P 1 2 3 4 5 6 7 8 9 10 Total Sample calculation for the third instalment, which is received at the end of the second year: Also, i could be either greater or less than j. Krisia Martinez. Embed Size px.

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