CLC.C3.2.CF1

An annuity stream of cash flow payments is a set of:

• equal cash flows occurring each time period forever

• equal cash flows occurring each time period over a fixed length of time

• increasing cash flows occurring at set intervals of time that go on forever

• equal cash flows occurring each time period under 10 years

A flow of unending and equal payments that occur at regular intervals of time is called

• amortization

• perpetuity

• annuity

• infinite

The interest rate charged per period multiplied by the number of periods per year is called the _____ rate

• compound interest

• effective annual

• annual percentage

An interest rate that is compounded monthly, but is expressed as if the rate were compounded annually, is called the _____ rate

• stated interest

• effective annual

• compound interest

Given a stated interest rate, which form of compounding will yield the highest effective rate of interest?

• monthly compounding

• annual compounding

• continuous compounding

What is the present value of $6,811 to be received in one year if the discount rate is 6.5 percent?

• $7,253.72

• $6,395.31

Little BA has $2,500 invested at a guaranteed rate of 4.35 percent, compounded annually. What will his investment be worth after five years?

• $3,321.32

• $3,093.16

• $2,857.59

Your parents plan to give you $100 a month for four years while you are in college. At a discount rate of 6 percent, compounded monthly, what are these payments worth to you when you first start college?

• 4158

• 4258

• other