FIN202-Final Exam 1

b

QN\=1 (20283) Which of the following does maximizing shareholder wealth not usually account for?
a. Risk.
b. Government regulation.
c. The timing of cash flows.
d. Amount of cash flows.

b

QN\=2 (20262) Financial markets in which equity and debt instruments with maturities greater than one year are traded are called
a. money markets.
b. capital markets.
c. stock markets.
d. none of these.

d

QN\=3 (20269) Which of the following organizational forms is subject to the most SEC regulations?
a. sole proprietorship
b. partnership
c. private corporation
d. public corporation

c

QN\=4 (20263) Profitability of a firm can be negatively affected by
a. (i) too much inventory.
b. (ii) too little inventory.
c. either (i) or (ii).
d. neither (i) nor (ii).

d

QN\=5 (20278) Which of the following can help align the behavior of managers with the goals of shareholders?
a. management compensation
b. managerial labor markets
c. an independent board of directors
d. all of these

a

QN\=6 (20279) Executives that repeatedly put their own interests before that of the firm may find that they have difficulty finding another job after their current one. This is an example of
a. the managerial labor market disciplining managers.
b. the market for corporate control.
c. the board of directors affecting the prospects of a manager.
d. none of these.

a

QN\=7 (20271) Which of the following is responsible for seeing that the best possible financial analysis is presented?
a. CFO
b. CEO
c. board of directors
d. audit committee

c

QN\=8 (20276) Shareholders elect \______________ to represent their interest in the firm.
a. a chairman
b. CEO
c. a board of directors
d. all of these

b

QN\=9 (20253) A trademark is an example of
a. a productive asset.
b. an intangible asset.
c. a nebulous asset.
d. none of these.

b

QN\=10 (20250) A stakeholder is
a. anyone geographically close to the firm's headquarters.
b. anyone with a claim on the cash flows of the firm.
c. any governmental agency.
d. all of these.

b

QN\=11 (20281) \_____________occur(s) when one party in a business transaction has information that is unavailable to the other parties in the transaction.
a. Profits
b. Information asymmetry
c. Information efficiency
d. None of these

d

QN\=12 (20273) When analysts and investors determine the value of a firm's stock, they should consider
a. the size of the expected cash flows associated with owning the stock.
b. the timing of the cash flows.
c. the riskiness of the cash flows.
d. all of these.

c

QN\=13 (20267) Which of the following cannot be engaged in managing the business?
a. a sole proprietor
b. a general partner
c. a limited partner
d. none of these

c

QN\=14 (20258) Capital budgeting involves
a. how a firm's day-to-day financial matters should be managed.
b. how the firm should finance its assets.
c. which productive assets the firm should employ.
d. all of these.

c

QN\=15 (20272) Which of the following is an appropriate goal for the firm?
a. profit maximization
b. revenue maximization
c. shareholder wealth maximization
d. tax minimization

b

QN\=16 (20277) An example of a direct agency cost is
a. a manager turning down a value-contributing project because of its risks.
b. a manager expensing a large dinner on the company expense report.
c. a manager using too little debt within the firm's capital structure because of the additional risk associated with debt.
d. all of these

a

QN\=17 (20256) Cash dividends are paid out of
a. residual cash.
b. liquidated assets.
c. long-term debt.
d. all of these.

d

QN\=18 (20252) Which of the following are stakeholders?
a. a shareholder
b. a lender
c. the IRS
d. all of these

a

QN\=19 (20260) Capital budgeting decisions generally involve
a. the fixed asset portion of the balance sheet.
b. the short-term portion of the balance sheet.
c. the current liability portion of the balance sheet.
d. all of these.

c

QN\=20 (20266) Which of the following owners is protected by limited liability?
a. a sole proprietor
b. a general partner
c. a limited partner
d. none of these

c

QN\=21 (20261) A good capital budgeting decision is
a. one in which the benefits of the project are equal to the cost of the asset.
b. one in which the benefits of the project are less than the cost of the asset.
c. one in which the benefits of the project are more than the cost of the asset.
d. all of these.

c

QN\=22 (20275) Which of the following is a principal within the agency relationship?
a. a company engineer
b. the CEO of the firm
c. a shareholder
d. the board of directors

d

QN\=23 (20280) Corruption in business
a. creates inefficiencies in an economy.
b. inhibits growth in an economy.
c. slows the rate of economic growth in a country.
d. all of these

b

QN\=24 (20257) Current liabilities are liabilities that
a. will be converted to cash within a year.
b. must be paid within a year.
c. will be converted to equity within a year.
d. none of these

a

QN\=25 (20274) One reason for the existence of agency problems between managers and share holders is that
a. there is a separation of ownership and control of the firm.
b. managers know how to manage the firm better than shareholders.
c. shareholders have unreasonable expectations about managerial performance.
d. none of these

c

QN\=26 (20255) The cash remaining after the firm has met its operating expenses, payments to creditors, and taxes is called
a. earnings per share.
b. capital contributed in excess of par.
c. residual cash.
d. assets.

c

QN\=27 (20282) If a firm establishes maximizing profits at the most important goal of the firm, which of the following would not be given proper consideration?
a. Sales revenues
b. Expenses
c. Risk
d. Cost of goods sold

a

QN\=28 (20259) Working capital management decisions involve
a. how a firm's day-to-day financial matters should be managed.
b. how the firm should finance its assets.
c. which productive assets the firm should employ.
d. all of these.

a

QN\=29 (20268) Which organizational form best enables a firm to sell its securities to the market?
a. sole proprietorship
b. partnership
c. private corporation
d. public corporation

d

QN\=30 (20264) Which of the following business organizational forms subjects the owner(s) to unlimited liability?
a. (i) sole proprietorship
b. (ii) partnership
c. (iii) corporation
d. (i) and (ii)

d

QN\=31 (20254) Which of the following is a basic source of funds for the firm?
a. (i) debt
b. (ii) equity
c. (iii) asset liquidations
d. (i) and (ii)

c

QN\=32 (20265) Which of the following business organizational forms is easiest to raise capital?
a. (i) sole proprietorship
b. (ii) partnership
c. (iii) corporation
d. (i) and (ii)

c

QN\=33 (20270) Which of the following reports directly to the owners of the firm (assume the firm is a public corporation)
a. CFO
b. CEO
c. board of directors
d. audit committee

b

QN\=34 (20251) If you have loaned capital to a firm, then you could be
a. a shareholder.
b. a stakeholder.
c. a partner.
d. all of these.

c

QN\=35 (20310) Which of the following statements is true?
a. Only 20 percent of interest income is taxable income for a corporation.
b. Dividend income is fully taxable income.
c. Interest paid on debt obligations is a tax-deductible business expense.
d. Dividends paid to stockholders are a tax-deductible business expense.

a

QN\=36 (20289) The going concern assumption implies that
a. a firm will continue to be in business for the foreseeable future.
b. a firm will be going out of business in the near future.
c. a firm will continue to operate in the near future but only after being acquired by another firm.
d. none of these

c

QN\=37 (20308) Which of the following is a cash flow from investing activities?
a. Cash payment of dividends to shareholders.
b. Cash from sale of products.
c. Purchase of plant, and equipment.
d. Rent received from industrial property owned.

c

QN\=38 (20293) The cost principle states that an asset should be recognized on the balance sheet at
a. the market value of the asset.
b. at the market value less the accumulated depreciation on the asset.
c. at its historical cost.
d. at its historical cost less the accumulated depreciation on the asset.

a

QN\=39 (20301) Which one of the following is NOT a cash flow from operating activities?
a. cash payments on the principal of long-term debt
b. payments for utilities and rent
c. payments to purchase raw materials
d. cash receipts from selling goods and services

b

QN\=40 (20304) Clarity Music Company has a marginal tax rate of 34 percent and an average tax rate of 32 percent this year. It is planning to construct a new recording studio next year. The appropriate tax rate to be applied on the income generated from the new studio is
a. the average tax rate.
b. the marginal tax rate.
c. either one.
d. none of these.

c

QN\=41 (20286) The generally accepted accounting principles (GAAP) are
a. rules that outline how a firm can operate ethically.
b. rules on how the firm will be valued in the event of a merger.
c. rules and procedures that define how companies are to maintain financial records and prepare financial reports.
d. rules for how a company can issue stock to raise money.

d

QN\=42 (20298) The major disadvantages of market-value accounting include
a. the difficulty in estimating the current value for some assets.
b. the difficulty in applying some of the valuation models used to estimate market values.
c. the resulting numbers are potentially open to abuse.
d. All of these are disadvantages of market-value accounting.

c

QN\=43 (20294) The conventional way of preparing a balance sheet is to list all assets in the order of their
a. market value.
b. risk.
c. liquidity.
d. historical cost.

b

QN\=44 (20299) Which one of the following does NOT belong on an income statement?
a. depreciation and amortization
b. goodwill
c. extraordinary items
d. nonrecurring expenses

b

QN\=45 (20300) Which one of the following are NOT all noncash items?
a. depreciation, deferred taxes, and prepaid expenses
b. depletion charges, taxes, and amortization
c. depletion charges, deferred taxes, and prepaid expenses
d. depreciation, amortization, and prepaid taxes

b

QN\=46 (20302) Cash flows from financing activities include all but one of the following:
a. cash payments on the principal of long-term debt
b. issuing and paying out on insurance contracts
c. cash purchases of treasury stock
d. cash proceeds from a bank loan

c

QN\=47 (20290) Dell Computer Corporation has receivables of $2.5 million and inventory worth $1.8 million. The firm plans to borrow $2 million for working capital purposes from Austin First National Bank. In evaluating the loan request, the bank should place the most emphasis on
a. the matching principle.
b. the realization principle.
c. the going-concern assumption.
d. the assumption of arm's-length transactions.

c

QN\=48 (20305) Which one of the following is NOT true for a corporation?
a. Interest paid on bonds issued last year is tax deductible.
b. Common-stock dividends to be paid this year are not tax deductible.
c. Common-stock dividends to be paid this year will be tax deductible if the firm has a net loss for the year.
d. Preferred stock dividends to be paid this year are not tax deductible.

b

QN\=49 (20291) The matching principle calls for the accountant of a firm to
a. identify an asset with each liability of the firm.
b. associate the revenue generated from a sale to the costs incurred to produce the product.
c. match each item of inventory with the historical cost at which it was acquired.
d. none of these

c

QN\=50 (20296) When prices are falling, valuing inventory using the LIFO method rather than FIFO gives
a. inventory a higher value but lowers net income.
b. inventory a lower value and also lowers net income.
c. both inventory and net income a higher value.
d. inventory a lower value and net income a higher value.

d

QN\=51 (20309) Which of the following best represents cash flows to investors?
a. Cash flow from operating activity, plus cash flow generated from net working capital.
b. Earnings before interest and taxes times 1 minus the firm's tax rate.
c. Net income, minus dividends paid to preferred stockholders.
d. Cash flow from operating activity, minus cash flow invested in net working capital, minus cash flow invested in long-term assets.

c

QN\=52 (20306) Which of the following statements is not a limitation associated with market valuation of balance sheet accounts?
a. It can be difficult to identify the market value of an asset, particularly if there are few transactions involving comparable assets.
b. The estimates of market value can involve complex financial modeling, and the resulting numbers can be open to manipulation and abuse.
c. Marking to market provides decision makers with a better chance of making the correct economic decision, given the information available.
d. Mark-to-market accounting can become inaccurate if market prices deviate from the "fundamental" values of assets and liabilities.

d

QN\=53 (20287) Accounting standards prescribed by GAAP are important because
a. they make the financial statements of all firms standardized.
b. they allow one to examine a firm's performance over time.
c. they make it possible for management or analysts to compare the firm's performance to that of other competitors.
d. all of these.

b

QN\=54 (20285) Annual reports are prepared by a firm's management to
a. communicate to shareholders the firm's failures in the previous year.
b. provide overview of the firm's financial and operating performance.
c. highlight the performance of its chief competitors.
d. provide a forecast of the economy in the coming years.

d

QN\=55 (20292) According to the realization principle, revenue from a sale of the firm's products are recognized
a. when the products are shipped to the buyer.
b. when the buyer orders the goods.
c. when cash is realized from the sale of the products.
d. at the time of the sale.

d

QN\=56 (20284) Which of the following sections do annual reports typically contain?
a. financial summary related to the past year's performance
b. information about the company, its products, and its activities
c. audited financial statements, including limited historical financial data
d. All of these sections are included in the annual report.

d

QN\=57 (20297) Which one of the following is NOT true about goodwill?
a. It is an intangible asset.
b. It represents the value of all unrecorded assets acquired in a merger.
c. It equals the premium paid over the fair market value of the assets acquired in a merger.
d. When goodwill appears on a firm's balance sheet, it reduces the firm's net worth by that amount.

d

QN\=58 (20307) Which of the following is an income statement item?
a. Accumulated depreciation.
b. Accrued taxes.
c. Retained earnings.
d. Selling and administrative expenses.

a

QN\=59 (20288) The assumption of arm's-length transaction states that
a. both parties to a transaction can act independently of each other and make economically rational decisions.
b. both parties to a transaction must have had previous transactions.
c. one of the parties to the transaction is a bank that has full knowledge of the firm's creditworthiness.
d. none of these

c

QN\=60 (20303) Which one of the following is NOT a cash flow from investing activities?
a. buying and selling bonds or stock of other firms
b. buying or selling of land, buildings, and plant and equipment
c. cash payments of dividends to shareholders
d. issuing and paying out on insurance contracts

c

QN\=61 (20295) When prices are rising, valuing ending inventory using the FIFO method rather than LIFO gives
a. inventory a higher value but lowers net income.
b. inventory a lower value and also lowers net income.
c. both inventory and net income a higher value.
d. inventory a lower value and net income a higher value.

b

QN\=62 (20328) Which one of the following statements is correct?
a. The lower the level of a firm's debt, the higher the firm's leverage.
b. The lower the level of a firm's debt, the lower the firm's equity multiplier.
c. The lower the level of a firm's debt, the higher the firm's equity multiplier.
d. The tax benefit from using debt financing reduces a firm's risk.

D

QN\=63 (20334) Which one of the following statements is NOT correct?
a. The DuPont system is based on two equations that relate a firm's ROA and ROE.
b. The DuPont system is a set of related ratios that links the balance sheet and the income statement.
c. Both management and shareholders can use this tool to understand the factors that drive a firm's ROE.
d. All of these are correct.

B

QN\=64 (20322) All but one of the following is true about quick ratios.
a. The quick ratio is calculated by dividing the most liquid of current assets by current liabilities.
b. Service firms that tend not to carry too much inventory will see significantly higher quick ratios than current ratios.
c. Inventory, being not very liquid, is subtracted from total current assets to determine the most liquid assets.
d. Quick ratios will tend to be much smaller than current ratio for manufacturing firms or other industries that have a lot of inventory.

D

QN\=65 (20320) Which of the following is true of ratio analysis?
a. A ratio is computed by dividing one balance sheet or income statement by another.
b. The choice of the scale determines the story that can be garnered from the ratio.
c. Ratios can be calculated based on the type of firm being analyzed or the kind of analysis being performed.
d. All of these are true.

B

QN\=66 (20341) Why is the quick ratio considered by some to be a better measure of liquidity than the current ratio?
a. The quick ratio more accurately reflects a firm's profitability.
b. It omits the least liquid current asset from the numerator of the ratio.
c. The current ratio does not include accounts receivable.
d. It measures how "quickly" cash flows through the firm.

B

QN\=67 (20327) One of the following statements is NOT true of asset turnover ratios.
a. Asset turnover ratios measure the level of sales per dollar of assets that the firm has.
b. The fixed assets turnover ratio is less significant for equipment-intensive manufacturing industry firms than the total assets turnover ratio.
c. The higher the total asset turnover, the more efficiently management is using total assets.
d. All of these are true.

A

QN\=68 (20323) Which one of the following does NOT change a firm's current ratio?
a. The firm collects on its accounts receivables.
b. The firm purchases inventory by taking a short-term loan.
c. The firm pays down its accounts payables.
d. None of these.

B

QN\=69 (20330) Which one of the following statements is NOT correct?
a. A leveraged firm is more risky than a firm that is not leveraged.
b. A leveraged firm is less risky than a firm that is not leveraged.
c. A firm that uses debt magnifies the return to its shareholders.
d. All of these statements are correct.

D

QN\=70 (20314) A firm's management analyzes financial statement's so that:
a. (i) they can get feedback on their investing, financing, and working capital decisions by identifying trends in the various accounts that are reported in the financial statements.
b. (ii) similar to shareholders, they can focus on profitability, dividend, capital appreciation, and return on investment.
c. (iii) they can get more stock options.
d. (i) and (ii).

C

QN\=71 (20317) All but one of the following is true of common-size balance sheets.
a. Each asset and liability item on the balance sheet is standardized by dividing it by total assets.
b. Balance sheet accounts are represented as percentages of total assets.
c. Each asset and liability item on the balance sheet is standardized by dividing it by sales.
d. Common-size financial statements allow us to make meaningful comparisons between the financial statements of two firms that are different in size.

C

QN\=72 (20340) Which of the following is a benefit of a common-size income statement?
a. It is very useful to assess how effectively a firm collected its accounts receivable.
b. It reveals a great deal of information about the adequacy of a firm's net working capital.
c. It can tell the analyst a great deal about the firm's efficiency and profitability.
d. It reveals how effectively a firm has increased its sales.

D

QN\=73 (20312) Shareholders analyze financial statements in order to:
a. assess the cash flows that the firm will generate from operations/
b. determine the firm's profitability, their return for that period, and the dividend they are likely to receive.
c. focus on the value of the stock they hold.
d. All of these.

D

QN\=74 (20313) The creditors of a firm analyze financial statements so that they can focus on
a. the firm's amount of debt.
b. the firm's ability to generate sufficient cash flows to meet all legal obligations first and still have sufficient cash flows to meet debt repayment and interest payments.
c. the firm's ability to meet its short-term obligations.
d. All of these.

A

QN\=75 (20333) For a firm that has both debt and equity,
a. ROE \> ROA.
b. ROE < ROA.
c. ROE \= ROA
d. None of these.

A

QN\=76 (20325) All but one of the following is true about the inventory turnover ratio.
a. It is calculated by dividing inventory by cost of goods sold.
b. It measures how many times the inventory is turned over into saleable products.
c. The more times a firm can turnover the inventory, the better.
d. Too high a turnover or too low a turnover could be a warning sign.

C

QN\=77 (20326) Which one of the following statements is NOT true?
a. The accounts receivables turnover ratio measures how quickly the firm collects on its credit sales.
b. One ratio that measures the efficiency of a firm's collection policy is days' sales outstanding.
c. The more days that it takes the firm to collect on its receivables, the more efficient the firm is.
d. DSO measures in days, the time the firm takes to convert its receivables into cash.

A

QN\=78 (20316) An individual analyzing a firm's financial statements should do all but one of the following:
a. Use unaudited financial statements.
b. Do a trend analysis.
c. Perform a benchmark analysis.
d. Compare the firm's performance to that of its direct competitors.

D

QN\=79 (20319) Common-size financial statements:
a. are a specialized application of ratio analysis.
b. allow us to make meaningful comparisons between the financial statements of two firms that are different in size.
c. are prepared by having each financial statement item expressed as a percentage of some base number, such as total assets or total revenues.
d. All of these are true.

C

QN\=80 (20321) Which of the following is NOT true of liquidity ratios?
a. They measure the ability of the firm to meet short-term obligations with short-term assets without putting the firm in financial trouble.
b. There are two commonly used ratios to measure liquidity—current ratio and quick ratio.
c. For manufacturing firms, quick ratios will tend to be much larger than current ratios.
d. The higher the number, the more liquid the firm and the better its ability to pay its short-term bills.

A

QN\=81 (20335) The DuPont equation shows that a firm's ROE is determined by three factors:
a. net profit margin, total asset turnover, and the equity multiplier
b. operating profit margin, ROA, and the ROE
c. net profit margin, total asset turnover, the ROA
d. ROA, total assets turnover, and the equity multiplier

A

QN\=82 (20318) All but one of the following is true of common-size income statements.
a. Each income statement item is standardized by dividing it by total assets.
b. Income statement accounts are represented as percentages of sales.
c. Each income statement item is standardized by dividing it by sales.
d. Common-size financial statement analysis is a specialized application of ratio analysis.

D

QN\=83 (20343) There are those that believe that the analysis of financial statements has limitations. Which of the statements below would qualify as a limitation of financial statement analysis?
a. Ratio analysis requires the analyst to evaluate a firm's performance over too many years to be of any value.
b. Proper ratio analysis requires the analyst to rely upon audited financial statements, which can be easily manipulated.
c. Thorough ratio analysis requires the analyst to refer to benchmarking, which is very easy to misinterpret.
d. Ratio analysis requires the analyst to utilize accounting data that is based on historical costs instead of current market values.

C

QN\=84 (20324) All else being equal, which one of the following will decrease a firm's current ratio?
a. a decrease in the net fixed assets
b. a decrease in depreciation
c. an increase in accounts payable
d. None of these

D

QN\=85 (20315) Anyone analyzing a firm's financial statements should
a. use audited financial statements only.
b. do a trend analysis.
c. perform a benchmark analysis.
d. All of these.

C

QN\=86 (20332) For a firm that has no debt in its capital structure,
a. ROE \> ROA.
b. ROE < ROA.
c. ROE \= ROA.
d. None of these.

D

QN\=87 (20338) Peer group analysis can be performed by
a. (i) management choosing a set of firms that are similar in size or sales, or who compete in the same market.
b. (ii) using the average ratios of this peer group, which would then be used as the benchmark.
c. (iii) identifying firms in the same industry that are grouped by size, sales, and product lines in order to establish benchmark ratios.
d. Only (i) and (ii) relate to peer group analysis.

B

QN\=88 (20311) Financial statements can be analyzed from the following three different perspectives:
a. management, regulator, and bondholder
b. management, shareholder, and creditor
c. regulator, shareholder, and creditor
d. shareholder, creditor, and regulator

D

QN\=89 (20339) Limitations of ratio analysis include all but
a. Ratios depend on accounting data based on historical costs.
b. Differences in accounting practices like FIFO versus LIFO make comparison difficult.
c. Trend analysis could be distorted by financial statements affected by inflation.
d. All of these are limitations of ratio analysis.

D

QN\=90 (20336) Which one of the following is a criticism of equating the goals of maximizing the ROE of a firm and maximizing the firm's shareholder wealth?
a. ROE is based on after-tax earnings, not cash flows.
b. ROE does not consider risk.
c. ROE ignores the size of the initial investment as well as future cash flows.
d. All of these are criticisms of ROE as a goal.

A

QN\=91 (20329) If firm A has a higher debt-to-equity ratio than firm B, then
a. firm A has a lower equity multiplier than firm B.
b. firm B has a lower equity multiplier than firm A.
c. firm B has lower financial leverage than firm A.
d. None of these.

C

QN\=92 (20337) Which one of the following is NOT an advantage of using ROE as a goal?
a. ROE is highly correlated with shareholder wealth maximization.
b. ROE and the DuPont analysis allow management to break down the performance and identify areas of strengths and weaknesses.
c. ROE does not consider risk.
d. All of these are advantages of using ROE as a goal.

B

QN\=93 (20342) Which of the following is not a method of "benchmarking"?
a. Conduct an industry group analysis.
b. Utilize the DuPont system to analyze a firm's performance.
c. Evaluating a single firm's performance over time.
d. Identify a group of firms that compete with the company being analyzed.

C

QN\=94 (20331) Coverage ratios, like times interest earned and cash coverage ratio, allow
a. a firm's management to assess how well they meet short-term liabilities.
b. a firm's shareholders to assess how well the firm will meet its short-term liabilities.
c. a firm's creditors to assess how well the firm will meet its interest obligations.
d. a firm's creditors to assess how well the firm will meet its short-term liabilities other than interest expense.

c

QN\=95 (20349) The process of converting an amount given at the present time into a future value is called
a. time value of money.
b. discounting.
c. compounding.
d. None of these.

a

QN\=96 (20353) The Rule of 72
a. can be used to determine the amount of time it takes to double an investment.
b. is fairly accurate for interest rates between 25 and 50 percent.
c. states that the time to double your money (TDM) approximately equals 72/i, where 72 represents the years it takes to double your investment.
d. None of these describe the Rule of 72.

c

QN\=97 (20354) Using higher discount rates will
a. not affect the present value of the future cash flow.
b. increase the present value of any future cash flow.
c. decrease the present value of any future cash flow.
d. None of these.

d

QN\=98 (20346) Which one of the following statements is NOT true?
a. The value of a dollar invested at a positive interest rate grows over time.
b. The further in the future you receive a dollar, the less it is worth today.
c. A dollar in hand today is worth more than a dollar to be received in the future.
d. The further in the future you receive a dollar, the more it is worth today.

d

QN\=99 (20360) Which of the following statements is false with respect to the present value of a future amount?
a. The higher the discount rate, the lower the present value of a single sum for a given time period.
b. The relation between present value and time is exponential.
c. The greater the time period, the lower the present value of a single sum for a given interest rate.
d. The lower the discount rate, the lower the present value of a single sum for a given time period.

d

QN\=100 (20345) Which one of the following statements is NOT true?
a. The time value money refers to what the value of the stream of future cash flows today is.
b. A dollar received today is worth more than a dollar received tomorrow.
c. A dollar received tomorrow is worth less than a dollar received today.
d. A dollar received today is worth less than a dollar received tomorrow.