Interest earned on a given deposit that has become part of the principal at the end of a specified period is called compound interest.

• true
• false

Annual rate of return dapat disebut juga (dapat lebih dari 1)

• discount rate
• opportunity cost
• cost of capital

________ is an annuity with an infinite life making continual annual payments

• A perpetuity
• A primia
• An indefinite
• A deep discount

The NOMINAL rate of interest is the contractual rate of interest charged by a lender or promised by a borrower.

• true
• false

The future value of an annuity DUE is always greater than the future value of an otherwise identical ORDINARY annuity for interest rates greater than zero.

• true
• false

________ are the MAJOR source of UNSECURED short-term financing for business firms.

• Accounts receivable
• Accruals
• Notes payable
• Accounts payable

3/10 net 45 EOM translates as

• a 10 percent cash discount may be taken if paid in three days; if no cash discount is taken, the balance is due in 45 days.
• a 3 percent cash discount may be taken if paid in 10 days; if no cash discount is taken, the balance is due 45 days after transaction is complete.
• a 3 percent cash discount may be taken if paid in 10 days; if no cash discount is taken, the balance is due 45 days after the end of the month.
• a 3 percent discount may be taken on 10 percent of the purchase if the account is paid within 45 days after the end of the month

The cost of giving up a cash discount on a credit purchase is

• added on to the price of the goods.
• deducted from the price of the goods.
• the implied interest rate paid in order to delay payment for an additional number of days.
• the true purchase price of the goods.

By OFFERING CREDIT to customers, the firm may

• increase the price of the good to cover its costs
• decrease its investment in accounts receivable
• decrease its investment in accounts payable
• decrease the cost of goods purchased.

A line of credit is an agreement between a commercial bank and a business specifying the amount of unsecured short-term borrowing the bank will make available to the firm over a given period of time.

• true
• false