Briefly discuss the concept of relevant cash flows when evaluating a new project.
Question 1: Explain the relationship between (i) discount rate and present value, and (ii) compound rate and future value.
Question 2: Why is the future value for an annuity due always higher than that of an ordinary annuity?
Question 3: Although the payment made on an amortized loan is constant, it can be decomposed into two components. What are the TWO (2) components? Describe the patterns of each component over time.
Question 4: Your company has recently announced that its net income was lower than last year. However, analysts found that the company's net cash flow increased. What factors could explain this discrepancy?