Tutorial 1: Time value of Money

The higher the interest rate, the lower the present value of a given cash flow

• True

• False

What is the current cash rate set by RBA in Australia?

• 3.85%

• 4.1%

• 4.35%

• 4.45%

Which of the following best describes an annuity?

• A single payment received in the future

• Equal payments at regular interval for a specified number of periods

• A lump sum payment today to receive a series of future repayments

• A loan that must be repaid with interest

Which of the following is true about a perpetuity

• It has a finite number of payments

• The payments increase each period

• It consists of equal payments made indefinitely

• It involves a lump sum payment at the end of a specified period.

The primary role of the financial system is to facilitate the transfer of funds from borrowers to savers.

• True

• False

What does the future value of a single cash flow represent?

• The amount needed to make a series of equal payments in the future

• The value of money at a future date given a certain interest rate

• The amount of money that has been borrowed

• The current value of a future sum of money

Without calculation, what could be the present value of $5,000 in 6 years at an interest rate of 4%

• $6,123.54

• $5,000

• $3,951.57

• $5,494.68

What is your tutor's name for FIN222?

• Ha

• Linh

• Du

• Duong