14. Which of the following statements is correct? (Points : 5) A For all positiv

Question

14. Which of the following statements is correct? (Points : 5) A For all positive values of r and n, FVIFr, n ? 1.0 and PVIFAr, n ? n. B You may use the PVIF tables to find the present value of an uneven series of payments. However, the PVIFA tables can never be of use, even if some of the payments constitute an annuity (for example, $100 each year for Years 3, 4, and 5), because the entire series does not constitute an annuity. C If a bank uses quarterly compounding for saving accounts, the simple rate will be greater than the effective annual rate. D The present value of a future sum decreases as either the simple interest rate or the number of discount periods per year increases. E All of the above statements are false.

Explanation / Answer

B You may use the PVIF tables to find the present value of an uneven series of payments. However, the PVIFA tables can never be of use, even if some of the payments constitute an annuity (for example, $100 each year for Years 3, 4, and 5), because the entire series does not constitute an annuity.

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