give reason too True or false. When simple interest is used, the accumulated amo
ID: 2900651 • Letter: G
Question
give reason too True or false. When simple interest is used, the accumulated amount is a linear function of time. True or false. Compound interest that is converted once a year is the same as simple interest. True or false. If interest is compounded annually, then the effective rate of interest is the same as the nominal rate of interest. True or false. The present value is always smaller than the future value. True or false. The future value of an annuity can be found by adding together all the payments that are paid into an account. True or false. The periodic payment R where R = P i/1 - (1 + i)-x and P is the loan amount and i is the interest per period that will amortize the loan at the end of the term comprising n periods. True or false. A sinking fund is the accumulated amount to be realized at some future date (the end of the term) when a fixed number of periodic payments are paid into an account earning interest at the rate of i per period.
Explanation / Answer
1) true , interest = P* R * T/100, so interest depend directly on time
2)false , compound interest is compunded where as simple interest is not compounded...so compound interest is more
3) True ,both Effective rate of interest is calculated as if it is compounded annually.So both are same
4) true , as pv is discounted and fv is compounded
5) False, They are not simply added .Apart from adding them they should also be componed to the future value and then they shouldbe added
6) True
7) True, a fund formed by periodically setting aside money for the gradual repayment of a debt or A means of repaying funds that were borrowed through a bond issue. The issuer makes periodic payments to a trustee who retires part of the issue by purchasing the bonds in the open market.
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