8.6 Learning Objective 8-6
1) The present value of a single amount in the future can be determined using a present value of $1 table.
2) The process of determining the present value of a sum of money is called discounting because the present value of a sum of money is
more
than the future value of a sum of money.
3) When computing the present value of an ordinary annuity, it is not necessary to know the number of discount periods.
4) When the market interest rate is equal to the stated rate of interest on bonds, the present value of the bonds will equal the bond's face value.
5) The present value of a future amount is found by discounting.
6) Interest is the difference between the amount borrowed and the principal on a note payable.
7) Interest is the cost of using money.
8) The term
time value of money
refers to the fact that money earns interest over time.
9) The principal of a note payable is the amount borrowed.
10) All of the following are necessary to compute the future value of a single amount EXCEPT the:
A) interest rate.
B) number of periods.
C) principal.
D) maturity value.