Question1: Given some amount to be received several years in the future, if the interest rate increases, the present value of the future amount will be:
[A] Stay the same
[B] Cannot tell
[C] Higher
[D] Lower
[E] Variable
Question2: The future value of a dollar as the interest rate increases and the farther in the future an initial deposit is to be received.
[A] Increases; increases
[B] Increases; decreases
[C] Decreases; decreases
[D] Decreases; increases
Question3: The IRR of a capital investment:
[A] Must exceed the cost of capital in order for the firm to accept the investment
[B] Is similar to the yield to maturity on a bond
[C] Changes when the cost of capital changes
[D] Is equal to the annual net cash flows divided by one half of the project’s cost when the cash flows are an annuity.