Time value of money

What is compounding?

• Process of accumulated interest

• Cash value of the investment at some point in the future

• Interest compounded more often than once a year

• Current value of future cash flows discounted at the appropriate discount rate

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What is present value of money?

• Process of accumulated interest

• Cash value of the investment at some point in the future

• Interest compounded more often than once a year

• Current value of future cash flows discounted at the appropriate discount rate

What is the special case of annuity which has cash flows that continue forever.....?

• Perpetuities

• Propensities

• Percerivables

• Postertuites

· What is the name of the annuitites that usually have payments that grow over time?

• Preferred annuities

• Multiplied annuities

• Growing annuities

• Perpetuities

The _________ the discount rate, the ________ the present value of a future cash flow?

• higher, lower.

• higher, higher

• lower, lower

• longer, shorter

WHich financial statement allows you to know the total debt that the company has with a supplier?

• Income statement

• Balance sheet

• all of them

• none of them

Does the heading (encabezado) of the Balance Sheet indicate……

• a period of time

• a point in time

• neither

• all of them