Corporate Finance Ch. 2 Already Passed

The effective annual rate (EAR) takes into account the ______ of interest that occurs within a year. {Ans: compounding}The __________ annual interest rate is usually calculated as the total annual payment divided by the number of payments in the year. {Ans: quoted}Which of the following is a perpetuity? a.) A constant stream of cash flows forever b.) A growing stream of cash flows for a fixed period c.) An undulating stream of cash flows forever d.) A constant stream of cash flows for a fixed period {Ans: a}Which of the following is the correct formula for the 1-period present value? {Ans: PV=FV/(1+r)}Which of the following will increase wealth? a.) a negative NPV b.) a positive NPV c.) a zero NPV {Ans: b}The annual percentage rate is the annual interest rate without consideration of _____. {Ans: compounding}