The future value will decrease shorter the period of time

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Reference no: EM132071703

1. A loan where the borrower pays interest each period and repays some or the entire principal of the loan over time is called a pure discount loan.

True

False

2. The future value will decrease the shorter the period of time.

True

False

3. You borrowed $1,500 at 6% compounded annually. Your payments are $143.17 at the end of each year. How many years will you make payments on the loan?

a. 17 years

b. 19 years

c. forever

d. 20 years

e. 18 years

4. You just won the lottery. You and your heirs will receive $26,000 per year forever, beginning one year from now. What is the present value of your winnings at an 8% discount rate?

a. $325,000

b. $312,500

c. $337,500

d. $200,000

e. $182,500

Reference no: EM132071703

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