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- Create simple examples to illustrate the following concepts.i. Time value of moneyii. Effective interestiii. Sinking Fundiv. Amortized loanThe yield on a savings account is also referred to as Select one: of O A. liquidity. O B. compounding. zion O C. rate of return. O D. asset management. O E. insolvency.Define the term reinvestment rate and describe how it differs for any cash flow series between (1) a PW value calculated at the MARR, and (2) the IROR value i*.
- Which of the following method is not based on concept of time value of money? A. Discounted payback period B. Accounting rate of return C. Profitability index D. Modified internal rate of returnWhich method does not consider the time value of money? Choose the correct. A. Net present value B. Internal Rate of Return C. Average rate of return D. Profitability IndexList and explain t the difference between profit and cash flow
- INTEREST AND DISCOUNT SHOW COMPLETE SOLUTIONS. DRAW CASH FLOW DIAGRAMS.Which one of the following methods is based on net profit rather than cash flows? a. net present value b. payback c. internal rate of return d. accounting rate of return e. profitability indexPresent its feasibility using 1. Rate or Return Method 2. Annual Worth Method 3. Present Worth Method 4. Future Worth Method 5. Payback Method All method should be presented with the cash flow diagram
- Which function of the financial system allows funds to flow from the surplus spending units to the deficit spending units. *a. provides liquidityb. promotes savingsc. means for storing wealthd. protection from risksis the difference between the gross present value of the benefits of that action and the amount of investment required to achieve those benefits Oa. Net Present Value (NPV) Ob. Economic value added (EVA) OC Internal Rate of Return (IRR) d. Discounted Cash FlowCalculate the free Cash Flow ratio