1. Cash flows of two years in absolute terms are uncomparable.’ Give reasons in support of your…
- May 25, 2021/ Finance
1. Cash flows of two years in absolute terms are uncomparable.’ Give reasons in support of your answer.
2. Define the following terms and phrases: (a) Compound sum of an annuity (b) Present value of a future sum (c) Present value of an annuity (d) Perpetuity (e) Annuity (f) Discount rate
3. What happens to the effective rate of interest as the frequency of compounding is increased?
4. As a financial consultant, will you advise your client to have term deposit in a commercial bank which pays 8 per cent interest compounded semi-annually or 8 per cent interest compounded annually? Why?