True or false: time value of money

Exercise and reference answers

Questions

1. Statement is true

   Yes

   Statement

   Compound interest is interest earned on interest.

2. Statement is true

   Yes

   Statement

   An unstated compounding period is assumed annual.

3. Statement is true

   No

   Statement

   Discounting and compounding move the same way.

4. Statement is true

   Yes

   Statement

   A lump sum can be an inflow or an outflow.

5. Statement is true

   No

   Statement

   The rule of 72 estimates the time to halve a value.

Instructions

Tap True or False for each statement.

Explanation